Mr. Sebastian Barnes:

We follow the potential tax policy changes very carefully. It is, obviously, complicated on the political front in the context of what is going to happen and what is going to be agreed. There are also domestic considerations. The new Administration in the United States of America, for example, could also have an impact. It is very hard to have a good assessment of what the impact of that will be. Much of the revenue relates to a few companies in a few sectors. Their tax planning is very complicated and it is very hard to say exactly how any of this will play out. This cuts both ways. It could be that ultimately revenue increases, but it could also fall. It requires a cautious approach. This is what the council is arguing for here. The council has a measure of excess corporation tax. This looks at historical and across-country trends. We are seeing, given how much Ireland raises, how much of that fits with those longer-term patterns and how much of it seems to be unusual. This suggests that quite a lot of these revenues cannot be explained in that way. As this dependency is increased over time, we really think that, as part of the recovery in the medium term, there needs to be a plan to reduce Ireland's reliance on this. We are in a very risky situation. This money is being spent on public services and if it was to disappear quickly, which it could, it would leave a big hole in the public finances and that would lead to a painful adjustment.

We therefore think it is much more appropriate that we anticipate that and that we do not spend it all now, excepting the short term, as there will be big pressure in the next two years. Beyond that, however, in the medium term we should not count on spending as much of this revenue as we are spending at present. We need a plan to reduce our reliance on it. The rainy day fund or prudence account could be a very good way of doing so. There are big questions about the sustainability of this model, and that pressure will add to the other points the Deputy made, including the point that in the medium term there are other things that are not sustainable. For example, more action is required on climate change, which is likely to have a fiscal cost. Ageing is accelerating at quite a fast pace. We have a young country now but that will not last all that long. In fact, our population is already ageing quite quickly.

There are therefore a lot of pressures which will all essentially come due at the same time, once we have moved beyond the Covid crisis and, it is hoped, the medium-term impact of Brexit. All these things will need to be addressed. This is why the choices are very difficult. It is not just a question of getting back to budget balance. There is a whole set of issues as to how we get there that need to be addressed at the same time.