Mr. Seamus Coffey:

I reiterate that it is not something the IFAC said. That was something I said in a different capacity. I am not sure I can elaborate very much on that. I still stick by the conclusions of the report. I agree with the Deputy that 2020 is not that much further into the distance but it would require further analysis to look ahead and that is not something I have undertaken. Subsequent research could be undertaken to look into that. Some of the reasons for the increases in 2015 and 2016 were assessed in the corporation tax review. The conclusion based on the evidence at the time was that it was sustainable until at least 2020. That is a personal view, and it is one I continue to hold. Further work would be required if one wants to go beyond that.

On the unpredictability of the receipts, to a certain extent the November receipts that were announced yesterday would not have been much of a surprise because of their links to the June receipts and the way in which corporation tax is paid. Companies make a preliminary payment in month six of their financial year and they pay the remaining amount, up to 90% of the amount due, in month 11. If companies have their year end on 31 December, month six is June and month 11 is November, so based on the June returns one can get a good indication of what will happen in November. The June returns were quite strong. If one extrapolates forward, one would expect to see quite strong receipts in November and that is what we did see, so it was not necessarily much of a surprise. June is halfway through the year. It does not allow one to predict at budget time, so if one wants to know what will happen in November 2019, the situation in June 2019 is a good indication but the budget is set already.

One issue with the predictability of the returns is that, by and large, although we are unsure of the sources of it, it is likely to remain highly concentrated. As the Revenue updates its figures for subsequent years, we think the concentration is likely to be maintained at the same level or possibly even increased, and potentially the amount being collected from multinationals could increase. Corporation tax should increase in an economy experiencing a cyclical upswing. It is just that we are seeing an increase in corporation tax far beyond that.

In the context of capacity within the economy, which we discussed earlier, one area where we said we could make space was by an increase in taxes. We have seen a huge increase in tax revenue from corporation tax but it is not coming from the domestic economy. In the main, it is coming from multinational companies outside the economy. It is coming through this international trade but is staying in Ireland and is flowing into the Government coffers and, because of the delays in moving to a budget surplus, it is being spent. We try to assess the impact of fiscal policy on the economy. It is likely that we are underestimating it because the primary balance, ignoring interest payments, is being boosted by corporation tax receipts which come from an external source. It is possibly providing a stimulus to the economy because it is not tax revenue coming out of our pockets and being spent on providing services to us. It is coming from the pockets of American companies, something we highlight in the report.

The predictability of this remains quite difficult. It has clearly overshot for a number of years but, because it is not linked directly to changes in domestic economic activity, I am not sure how we can overcome that. As the year progresses, there can be changes. The Minister noted that a certain share of the 2018 receipts is deemed to be a one-off and there is no way a permanent increase in spending should be based on one-off receipts. We would like to see a clearer division between annual developments in revenue and annual developments in expenditure. If corporation tax was declining, our position would be that there should be no change on the spending side. As corporation tax has gone up, however, it has been linked to increases in spending. We feel that maybe half of our advice will be listened to and we will be ignored when we say there should not be spending increases. If corporation tax was to decline and we were to hold a consistent position, people would say the Irish Fiscal Advisory Council was happy for spending to be at this high level. They would say it should not decline but we say there should not be increases, and this would be to avoid a decline in the future.