Mr. Sebastian Barnes:

It resembles the housing debate in many ways. The structure of the problem is different, but for many years people warned about that. Eventually people thought that perhaps those people are not so right after all, but in the end it came crashing down. One of the difficulties with corporation tax is that it is unpredictable. We have had a whole string of shocks and surprises. We thought that when the OECD BEPS process kicked off it would be bad, but it was not. That shows how complex these things are.

We have done more work on this over the summer. What is difficult is that we cannot see where the money is coming from. We suspect there are a few big companies. We can count them on the fingers of one hand. There is no actual data that would tell us who those companies are and exactly how they are making that money. That is one of the things that should give us pause for concern.

There are a number of risks. One is the political risk, in the short run, but things can turn around very quickly, in particular in the US political system, and can be very slow as well. It can go both ways. People are always looking at this kind of money. A lobby is trying to reform these things in the US, and we need to be aware of that. The main risk is around a handful of companies. Those companies have done really well over the past couple of years and may continue to do well because they are in the digital or pharma sectors which are the future of the economy.

Those companies make huge profit margins compared with almost any other company. At some point those companies might become less successful. They may have a few products that flop or a CEO who is not very good. They might decide to reorganise themselves, split up or do all sorts of things. They might decide not to have a base in Ireland anymore. All of these things could lead to a big change in revenue. A lot of revenues coming through Ireland are really European revenues. Europe may go through a bad time. Advertising revenue is very cyclical. There are a lot of specific factors that we do not really understand, but the problem is that we are very close to them. If an individual company, or a couple of companies or sectors, did badly, profits could fall by quite a lot. That would leave us with a significant hole in the public finances.

We have tried to be balanced. It would not surprise me if those revenues went up in the next few years, but it would also not surprise me if they went down. It is a genuine risk and it is difficult because we cannot put our finger on what will happen. That fact shows that we should not rely on that revenue.