Oireachtas Joint and Select Committees

Wednesday, 4 December 2019

Committee on Budgetary Oversight

Fiscal Assessment Report: Irish Fiscal Advisory Council

Photo of Tommy BroughanTommy Broughan (Dublin Bay North, Independent) | Oireachtas source

I welcome the representatives of the fiscal council. To follow up further on corporation tax, the financial journalist, Chris Johns, recently drew attention to the fact that the volatility of corporation tax receipts mainly arises in respect of the companies involved in foreign direct investment. The Department did some modelling of its own with regard to recent developments in corporation tax. This included some interesting information. For example, I notice that Luxembourg's rate is twice ours but that it brings in more tax than we do. Has the Irish Fiscal Advisory Council delved into this issue in the same way as the Department of Finance? Are there problems with the tax itself in respect of its volatility in addition to the fact that Google, which is just up the road, and other such companies provide such a big chunk of the receipts? It is remarkable that the Department's own report from last month modelling the developments shows such incredible volatility over a number of years and that forecasting is so bad. Is something fundamentally wrong? Does Mr. Johns have a point about the way the tax is applied to indigenous enterprise? Perhaps it should be making a more significant contribution to general taxation revenue. He seems to argue that too many things can be written off against an indigenous company's tax liability. Is there a fundamental problem with the tax, aside from the reliance on foreign companies?

We are now speaking after the budget but we also had the council before us prior to the budget. Have things changed fundamentally? Many of us felt the budget was a non-event. Does Mr. Coffey expect another budget in the next financial year? The results of the general election in the UK will soon be known, we will know more about Brexit at the end of January, and we will probably have our own general election. Does Mr. Coffey expect a whole new economic scenario to require a real budget, which the current budget is not? The council has provided a revised heatmap on page 65 of the report. Are there fundamental differences between this and what we saw before the budget?

In response to my colleague, Deputy Quinlivan, the witnesses referred to information the council does not have and to improving general Government accounting by the Department of Finance. Are there still a lot of unknown unknowns or known knowns? The local authorities and agencies are spending money but the Department of Finance still does not seem to know. What does the council recommend in that area?

On climate change mitigation, we have new levels of carbon taxation. It looks like carbon taxes will increase dramatically over the next decade. What role does the council see carbon mitigation measures playing in expanding the sustainable revenue base of the country? Those are the main questions I wished to ask.

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