James O'Connor (Cork East, Fianna Fail)
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116. To ask the Minister for Finance the estimated revenue from corporation tax in the context of growing global inflation rates and economic difficulties; and if he will make a statement on the matter. [46333/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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Since 2015, the Exchequer has benefitted from a remarkable surge in corporation tax receipts. As of end-August, these receipts stood at nearly €12 billion, and my Department now expects that total corporation tax revenue this year will top €20 billion.

For comparison, a decade ago tax paid by the corporate sector amounted to approximately €4 billion.

Certainly, these receipts are, in many respects, welcome. But as the Deputy will know, I have frequently warned of the risks around corporation tax. These revenues are built on an extremely narrow tax base, with the top ten large corporate payers paying more than half of all receipts.

This means that our tax base is vulnerable to the business decisions of a small number of large, highly profitable firms. As such, these unreliable and potentially volatile receipts are not an appropriate basis for funding permanent expenditure commitments.

In the Summer Economic Statementlast year, this Government set out its medium-term budgetary framework. The fundamental basis of this strategy is that growth in core public expenditure will be linked to the trend growth rate of the economy, irrespective of upside surprises on revenue. By decoupling expenditure from windfall revenue, this will mitigate much of the risk of corporation tax receipts being used to fund expenditure.

For this year only, in recognition of the cost of living challenge, Government has temporarily departed from the parameters set out in this strategy, but for future years we will return to the original strategy.

This approach strikes the right balance between providing assistance today and keeping our public finances on a sustainable trajectory.

Finally, earlier this month my Department published a paper examining vulnerabilities around corporation tax. Using a range of different methodologies, this analysis suggests that the amount of corporation tax receipts that could be unsustainable is in the region of €4 to €6 billion. As a result, the headline figures may look very positive but can mask very real vulnerabilities in our public finances.

In order to highlight this ongoing risk, Government will publish an alternative measure of the fiscal position, excluding estimates of windfall corporation tax receipts, as part of the Budget Day documentation next week.