Donohoe fears job losses at multinational companies will hurt tax revenues

Ireland’s reliance on high-paid workers at multinationals is jeopardizing future tax revenues, the Treasury Department has warned. A surge in personal income tax receipts last year — the revenue was 3.7 billion euros, or 16 percent more than before the pandemic — was largely due to wage increases rather than job creation, the ministry said in its annual tax report. Pandemic-proof sectors like IT and pharmaceuticals have generated record tax revenues over the past year that have continued into 2022. However, the Government is increasingly concerned not only about a loss of corporate tax revenue as a result of global tax reform, but also about job losses and a brain drain from Ireland. “In the event of a shock to the multinational sector, it would also result in significant losses in income tax revenues. Therefore, concentration risk – where a relatively large part of income and corporate tax revenues accrue in large multinational companies – is a significant vulnerability for public finances,” Finance Minister Paschal Donohoe said at the release of the annual tax report. Last year’s OECD deal – taxing large companies at 15 per cent of their global income and shifting taxing rights to the countries where they do their sales – could result in Ireland earning around £2bn annually once implemented in 2024. If this – or an economic slowdown – forcing a reduction in multinational investment in Ireland, this could herald a “very substantial loss of income tax (and PRSI) revenue”, the tax report says. Corporate tax revenue saw the largest percentage jump last year – 41 per cent, or £4.4bn. The Irish Fiscal Advisory Council said this week total tax revenue could reach £3.5bn before estimates published in the government’s economic statement dated Sommer had submitted just a few weeks ago. But without “excess” corporate taxes — amounts that cannot be justified by the performance of the domestic economy — the budget this year would be in deficit rather than in surplus. It warned the government against dumping excess proceeds into a bad-weather fund or a new pension reserve fund to meet the skyrocketing costs of enabling people to retire at age 66. The Treasury estimates the government will need to raise an additional €7 billion to fund pensions and other age-related public service spending by the end of the decade.

https://www.independent.ie/business/budget/donohoe-fears-job-losses-among-multinationals-will-dent-tax-take-41954099.html Donohoe fears job losses at multinational companies will hurt tax revenues

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