Dr. Kieran McQuinn:

It is very difficult to classify a windfall tax. Ultimately, if you were to do so in an unconstrained way then you would consider the performance of individual firms. That data is not available to us nor it is available to the officials in the Department of Finance. It is important to define a windfall tax even if a relatively straightforward or simple rule is applied. For instance, the Department at the start of each year compiles forecasts for the individual tax heading. So the Department forecasts that corporation tax receipts will increase by, say, 5% this year and income tax will increase by 6% or whatever. The way that the ESRI has examined the matter in the past is to take what actually happened, at the end of the year, and compare that to the forecast but of course that all depends on the forecast at the start of the year. It is a little bit unclear how the windfall tax is determined at present. We think, even if it is a very straightforward simple rule of thumb, then that should be outlined.

The bottom line is €2 billion was put in the fund last year and €4 billion may be put in the fund this year. Again, given the way in which the fiscal accounts are likely to pan out next year another €4 billion could be put in the fund. So pretty soon there will be a fund of around €10 billion, which is a sizeable amount of resources. Therefore, it is important that we understand how the money is allocated and decide what to do with it or know how to deal with it.