Ireland’s corporation tax revenue has increased significantly in the first half of 2024, reaching €12bn (£10.16bn), which is 15% more than the same period in 2023. This increase is due to reforms in global tax rules that have attracted major companies to pay a large portion of their corporation tax in Ireland. As a result, the government is establishing a sovereign wealth fund with the windfall generated from corporation tax.
In contrast, last year, Ireland raised €24bn (£20.32bn) in corporation tax, which is three times more than six years ago. The country’s Finance Minister, Jack Chambers, has announced that the budget will be brought forward by a week to 1 October. This move has sparked speculation that the governing coalition may be planning to call a general election before the end of the year. However, Mr. Chambers has stated that the government is committed to running its full term into next year.
The Irish economy continues to perform well, with income taxes totaling almost €17bn (£14.4bn) over the first six months of 2024, which is a 7.5% increase compared to the previous year. VAT receipts have also increased by 6.2%, reflecting consumer spending.
Despite this strong economic performance, the Fiscal Advisory Council has warned against implementing a “giveaway” pre-election budget due to inflationary pressures and potential overheating of the economy. The council emphasized that careful choices must be made regarding tax cuts and spending increases to avoid these risks.
Overall, while Ireland’s corporation tax revenue continues to grow and its economy remains strong, it is crucial for policymakers to exercise caution when making decisions about fiscal policy in order to maintain economic stability and avoid overheating or inflationary pressures.
