Dr. Kieran McQuinn:

There has been ongoing concern about buoyancy, particularly from the corporation tax source. Every year, when we formulate our forecasts for corporation tax revenues, we deliberately take quite a very conservative path, and at the end of the year, we are surprised by how large the increase has been relative to what we had expected. That is certainly one area where there is an ongoing issue in terms of the sustainability of that revenue stream. Along with others, we have suggested we need to estimate as far as we can, because it is a difficult thing to do, how much of that increase has been what we call windfall in nature - how much of it is sustainable and how much of it is not. We should try to base our current expenditure plans on the basis of the elements of corporation tax we believe are sustainable. We should not seek to spend all of it on current expenditure but leave some of it for capital expenditure or divert it elsewhere. The extent to which the crisis has an impact on corporations generally and multinationals is hard to say but it is more a concern generally about the sustainability of that taxation revenue stream.

Other elements of the tax base have registered quite strong growth as well. They include income tax returns and VAT. A lot of them are registering strong returns at the moment because they are bouncing back from low levels during the pandemic, especially VAT sources and, to a certain extent, excise. In general, we still believe the economy is going to grow this year and next year despite the crisis. With that, we would still expect fairly strong taxation revenue to grow but, again, there is the ongoing issue about how sustainable is the kind of increase in corporation tax.