Mr. Seamus Coffey:

I think the key issue is just to identify it as a risk. There is no doubt that it is better to be receiving this money than not receiving it. If corporation tax had stayed at around €4 billion or €5 billion we might not be identifying it as a risk factor. It is more than €8 billion and projected to hit €10 billion by the, albeit shortened, forecast horizon of 2021. It has moved in the reverse direction to interest. It has gone from €5 billion to €10 billion, whereas interest has gone from €10 billion to €5 billion. These are some of the huge tailwinds being referred to in relation to the public finances.

On the risk, I am not sure I consider it an unacceptable risk. I have not seen the report published today, but I think it is something we have identified as being a potential issue, that is, the volatility which has been referred to and the dependence on a small number of firms, with the top ten accounting for 40%. Within that top ten, there is significant volatility and change in the amounts being paid. To go back to an earlier point about things not being mutually exclusive, I think we can focus on the indigenous economy and also have a foreign direct investment, FDI, strategy. It is not one or the other. Our key point on corporation tax is to avoid building up and building in permanent increases in spending and permanent reduction in tax revenue on the basis that these revenues will be here forever. I do not think that would be an appropriate approach for fiscal policy to take.

We have seen various proposals for how some corporation tax can or could be set aside. Some of those might have been worth following through but over the last number of years, as the corporation tax has increased, much of it has been used to fund budgetary measures. We have seen limited improvement in the budgetary position where the annual balance is concerned, even with these tailwinds. An economy growing strongly, surging corporation tax and falling interest costs are not feeding through into improvements in the public balance. These benefits are being used. The issue is that if one or more of these turns against us, underlying weaknesses in the public finances may be revealed that might not be apparent at the moment but to which these indicators.

I do not think it is something that we have to address. It is good to be collecting €8 billion in corporation tax. It is just a matter of identifying it as a potential risk or a potential source of uncertainty.