Sinn Féin in Government would spend the budget surplus and “create a very, very large risk” to the public finances, Minister for Public Expenditure Paschal Donohoe has claimed.
Ireland’s low 12.5% rate of corporation tax has lured numerous large international companies to the Republic and revenue raised from corporation tax has doubled since 2019.
Officials believe it will continue to rise and Ireland’s budget surplus will grow accordingly.
“This year, we will have a surplus of around €10 billion with a further increase in that surplus for next year,” Minister Donohoe told The Hard Shoulder.
“We expect that [surplus] figure to be anywhere from €14 up to €16 billion - with so much of that being driven by the increase in corporate tax receipts that continue to go up year by year.”
Minister Donohoe said the Government planned to increase public spending but cautioned it would be foolish to rely on corporation tax receipts as a basis for long-term spending plans.
“It’s gone up so quickly, it could go down very, very quickly as well,” he said.
“What we have learnt in dealing with shocks like a pandemic and a war, is we never know what is around the corner and we need to be careful that… we don’t spend money that we might collect today, but that might not be available tomorrow.”
Last year, Sinn Féin said their cost of living proposals would still leave the State with “a modest surplus” of €400 million; however, Minister Donohoe said this would not be wise.
“I do believe that a Government that is led by Sinn Féin would spend money that we’ve already set aside and would spend this higher level of corporate tax increase,” he said.
“I believe that in doing that they would create a very, very large risk regarding how we are investing in our country’s future.
“I’ve been around once in politics when this happened before - I saw the harm it caused in our country, our society and our economy - and I’m making the case again that whatever about making new mistakes, we should avoid making the same mistakes that we’ve already made.”
The rate of corporation tax is due to rise to 15% next year in line with a global tax agreement negotiated by the OECD.
Sinn Féin has been contacted for comment.
Main image: Paschal Donohoe TD. Picture by: Julien Behal Photograph / RollingNews.ie