McGrath to bring plan to Cabinet over corporation tax windfall surplus
Minister for Finance Michael McGrath has said he is planning to bring a proposal to Cabinet on how Ireland should deal with the large corporation tax windfall surpluses forecast to flow into the State.
Speaking on RTÉ’s Prime Time last night, he said there was a surplus last year of around €8 billion, and the forecast this year is around €10 billion, and it was anticipated that this figure could grow over the years ahead.
Earlier this month, Minister McGrath said it was “blindingly obvious” to him that the Government needs to set up a fund to save some of the billions of euro expected through a windfall of corporation tax in the coming years.
He was speaking after the publication of a report setting out the options for what is expected to be €65 billion in corporation tax receipts over the next three years.
Mr McGrath said there would be three pillars in his proposal to Government.
Firstly, a long term investment fund would be established, to deliver a return to meet some of the future costs of Government.
Secondly, there would be a reduction of the national debt, especially where Government bonds mature, and would otherwise have to be refinanced at more expensive rates.
Thirdly, Mr McGrath said he would propose to add to the National Development Plan.
He said that because a large proportion of the projected future surpluses would come from windfall corporation tax receipts that could prove to be temporary, the Government could not make the mistake of making permanent expenditure commitments or permanent tax reductions.
Mr McGrath said “additional funding” will be made available to meet demands of the housing crisis.
“We are already providing direct exchequer capital from the Government of well over €4 billion and we are prepared to do more.
“The truth is that the constraint to delivering the homes our country so badly needs has not been funding.
“It has been capacity, it has been the planning system which we are reforming, it has been a shortage of labour, it has been construction materials inflation.
“What I am signalling very clearly is that is that using some of these resources there is a willingness on my part.”