Wednesday, 14 July 2021
Department of Finance
On a straightforward, mathematical basis there is a large theoretical yield from increasing the corporation tax rate for trading income. However, the Economic and Social Research Institute (ESRI) reports that research from both the United States and Europe suggests that foreign direct investment (FDI) and the decisions of multinationals to locate in Ireland are highly sensitive to rates of corporation tax. Therefore, increasing the corporation tax rate would likely lead to lower levels of economic activity, behavioural changes in the locational decisions of multinational companies and employment in the multinational sector. As a result of the difficulty of predicting and quantifying these impacts, particularly in the current economic climate, it is not possible to accurately or robustly estimate the potential yield from the increases proposed by the Deputy. I would note however that ESRI research in 2011 estimated that reducing Ireland’s corporation tax rate from 40% in 1994 to 12.5% in 2003 added almost 4% to the level of economic output in 2005 and around €2 billion in corporation tax revenues.
Furthermore, while corporation tax is statutorily levied on the profits of businesses, the ESRI states that researchers have concluded that a large share of the burden is likely to be borne by workers in the form of lower wages. This can arise from companies deciding to invest less, leading to lower capital and lower labour productivity and wages. As the ESRI found that small and medium enterprises (SMEs) predominantly finance their investments in fixed assets, intangible assets and staff through internal funds, raising the rate of corporation tax would hamper their ability to invest and grow.
90. To ask the Minister for Finance the amount of funding raised to date through the application of the carbon tax on green diesel used by agricultural contractors; and if he will make a statement on the matter. [38452/21]
The Carbon Tax receipts in respect of Marked Gas Oil (green diesel) for each of the years since its introduction in 2010 up to 2019 are published on the Revenue website at the following link:
www.revenue.ie/en/corporate/information-about-revenue/statistics/excise/receipts-volume-and-price/excise-receipts-commodity.aspx. The provisional Carbon Tax receipts for 2020 are €65.3 million and may be subject to some minor adjustments.
I am advised by Revenue that receipts from Carbon Tax in respect of Marked Gas Oil are not recorded in a manner that allows extrapolation of the amounts directly attributable to agricultural contractors.