Fiscal watchdog says proposed public sector pay deal would help to ‘create space to support more vulnerable households’

IFAC chairman Sebastian Barnes who suggests that but for the surge in Corporation tax receipts, the State would not have had a surplus this year, but rather a deficit of €5 billion.

“There are big risks to the economy going into this winter, particularly of a shut-off in gas supplies to Europe. Covid-19 and Brexit still pose uncertainties. Financial conditions could tighten. And domestically, we could see competitiveness issues and capacity constraints arising from labour shortages, rising wages, and housing costs,” Mr Barnes has stated.

“Improved targeting of cost-of-living supports would be less costly and would help get the balance right. Ireland’s welfare and income tax system offer useful avenues through which to better target supports.” “Over-reliance on corporation tax revenues carries large risks. These receipts are highly concentrated with 10 firms accounting for 53 per cent of last year’s net receipts. These receipts are unpredictable; they depend on company-specific developments and there are risks associated with changes in the international tax regime.

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