Government can’t rely on ‘volatile’ corporation tax – McGrath

April 20, 2023

The Government says the right decisions must be made with the budget
surplus recorded this year, according to the Minister for Finance.

Michael McGrath says the Government cannot rely on excess corporate
tax receipts into the future, adding that at the best of times, it is a
volatile source of revenue.

“There is an acute need to be careful, because if we get it wrong, it
will come at a high cost to people down the line. And I’m not going to
be the minister that signs up for that,” Mr McGrath said.

The Minister said there are “very significant costs coming down the
line” including an aging population that will require more resources.

He said that there will be a tax package in the budget but warned
that the Government must avoid making permanent changes that recur every
year on the back of corporation taxes that could prove temporary.

The Minister pointed out that billions of euro have been provided in exceptional supports to households in recent years.

Despite this, there is still a budget surplus and the buoyant
corporation tax receipts have not been used for day to day expenses, he
said.

He also said there is no political input into financial forecasts but
they are done on an independent basis by economists employed by the
Government.

Speaking on Morning Ireland, the Minister for Finance also said he is
not ruling out more special measures to help people deal with the cost
of living crisis.

But Michael McGrath said it is important to wait until the next budget before implementing measures.

He said everyone can see the effects of inflation in their daily
lives but acknowledged that not everyone has the capacity to deal with
it equally.

The Minister also said he recognises the “disconnect” between the
Exchequer figures released yesterday for those people facing
homelessness.

He said the figures “are really positive and this is a good news
story for Ireland because it does give us the financial firepower and
capacity to address the major challenges that we face.”

Mr McGrath said that the housing issues are being addressed by the
Minister for Housing, Local Authorities and the Housing Agency.

“We
are determined to put solutions in place for people who find themselves
in a situation where they may lose their home or they currently don’t
have a home,” he stated.

“Money has not been the constraint during this Government’s lifetime in relation to the delivery of housing,” he added.

He gave a commitment “that when it comes to providing the resources
that are necessary, we will not be found wanting in relation to
housing”.

“It is the number one domestic challenge that we face. We are making progress,” he said.

“When you look at the output of almost 30,000 homes last year – and
while we did fall short against our targets in relation to social and
affordable housing – we are doing more than has been done for a very,
very long time and the funding is there to do much more and I’m giving
that commitment,” he added.

In relation to possible tax measures to encourage small landlords to
stay in the rental sector, Mr McGrath said he has given a commitment
that in the budget in the autumn there will be measures to encourage
further investment in the rental sector and to support existing
landlords.

“It is a fact that we have seen a very significant departure of
landlords from the market. We need a private rental sector,
notwithstanding the enormous investment that we will continue to make in
relation to public housing, we need the availability of private rental
accommodation,” he said.

“I am giving a commitment that there will be measures in the budget
both to attract and retain investment in the rental sector,” he added.

Article Source: Government can’t rely on ‘volatile’ corporation tax – McGrath

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