Oireachtas Joint and Select Committees

Tuesday, 25 June 2019

Committee on Budgetary Oversight

Budget 2020 and Macroeconomic Issues: Discussion

Photo of John LahartJohn Lahart (Dublin South West, Fianna Fail) | Oireachtas source

I thank both our witnesses. We use the term "witnesses" for some strange reason. I thank them for their service over the years, particularly Mr. McCarthy who has done the State some service over decades. I will start with an observation or two on what Dr. Kinsella said. In some of the work we have done over recent months, the committee has picked away at the common themes that have been coming up over the past two years. These include our exposure to corporation tax receipts, doing something about the carbon tax in last year's budget and equalising duty on petrol and duty. That is what I like about this committee. It is important for us to try to be objective, although we have political differences. The politics comes in when we go back to our parties.

Dr. Kinsella is right that there have been missed opportunities with regard to stable sources of revenues. The local property tax is one example, as he indicated. Objectively, these issues have been fudged. We have asked how one can tell that the corporation tax take will decrease. The most recent group we asked was IFAC but we have also asked the IMF in informal discussions. The answer is that, given enough time, it cannot do anything but drop. That response is just not scientific enough, although we all believe it is going to happen. The IMF was the only group to gesture to any kind of modelling having been done in this regard. I take Dr. Kinsella's point and, if we have time, we should try to model the consequences of a 5% drop in corporation tax receipts and to ask how we will fund ourselves in the absence of that money.

We are getting a slightly better picture of why corporation tax receipts have ballooned in the past two years. Do the witnesses have any insight into the scenario beyond 2020, excluding aspects that are obvious to laypersons like me, for example, American pressure on corporation tax policy? Can they offer us any insight we have not been offered before with regard to the likely longevity of the current level of receipts?

The revenue in this regard dropped last month. We are told that May is the biggest month and June the next biggest, so we will be watching out for the June statistics. Is there anything the witnesses feel needs to be said to this committee about corporation tax which has not been said?

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