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Irish Times
2 days ago
- Business
- Irish Times
Paranormal Ireland: a rich country reliant on ghostly apparitions of magic money
Contemporary Ireland is best thought of as a paranormal state. The paranormal is that which is 'analogous or parallel to, but separate from or going beyond' known reality. The principle site of paranormal activity in Ireland is not some haunted castle or spooky seance. It is the Government coffers. We have a fiscal policy and a parafiscal one – a ghostly exchequer parallel to the known reality of the Irish economy. By the end of this year, the State will have taken in roughly €186 billion in corporation taxes over the last decade. In many ways, the story of contemporary Ireland is encapsulated in the astonishing growth in the share of overall tax revenue contributed by corporation tax. In 1984, it was just 4 per cent. By 2014, it had almost tripled to 11 per cent. It has by now almost tripled again to 29 per cent. Most of this dizzying increase is what official bodies call 'excess'. 'In other words,' as the Irish Fiscal Advisory Council puts it, 'it cannot be explained by underlying domestic activity.' Or, in the Central Bank 's formulation, it is 'disconnected from actual economic activity in Ireland'. It is paranormal and, I think, unprecedented. Has any government in the history of the world ever been so dependent on the excessive and the inexplicable? Has any state ever driven such a great distance on the fumes of airy superfluity? To get a sense of the scale of this ectoplasmic largesse, we can ask: how much money would the State have taken in last year if the share of its revenues accounted for by corporation tax were the same as 2014? The answer would be €11.9 billion. And what did the State actually take in corporation tax in 2024? That answer is €28 billion . READ MORE So we're looking at €16 billion of last year's revenue that was accounted for simply by the magical growth in the proportional contribution of corporation tax paid by a tiny number of American multinationals. To put that in context, €16 billion is the combined budget of the departments of Education and Transport this year. Little Ireland received more tax revenue from American corporations than any other country outside the US At one level, of course, this windfall is not mysterious. The 'excess' of magic money is a byproduct of the machinations of around 10 gigantic US-based corporations. They have transferred their intangible assets – patents, trademarks, brands and software licences – from overly obvious offshore tax havens to the more respectable but still very generous environs of Ireland. The Irishness of this intellectual property (IP) is a legal fiction. We might call it IPP: Intellectual Plastic Paddy. But IPP allows the corporations to massively inflate the profits they declare here and the State to claim 12.5 per cent (now rising to 15 per cent) of those profits. It might be reassuring to imagine that all this is the result of a cunning plan of Irish governments. But it isn't. The State was red in tooth and claw in its fight to stop the modest reforms to global tax regimes that resulted in the decisions of the multinationals to onshore their IP out of the tax havens and into Ireland. It went along with those reforms grudgingly and with bad grace when it had no real choice. This is the irony: the State has been enriched against its will, dragged kicking and screaming into Aladdin's cave. Nonetheless, in 2022-2023, the latest year for which we have figures from the US, little Ireland received more tax revenue from American corporations than any other country outside the US. We got twice as much as China, three times as much as Germany, as much as India and Canada put together. It is this magic fountain that waters our parafiscal exchequer. The State essentially runs two budgets. One, based on actual economic activity in Ireland, is consistently in deficit. But the other, inflated by the IPP bonanza, is in flamboyantly extravagant surplus. The first is masked by the second. The paranormal occludes the normal. So what? If we leave aside the morality – and by God do we ever leave aside the morality – it's free money. The luck of the Irish has turned from a sick joke into a daily reality. Why not just enjoy it? The problem, though, is that paranormal activity is bewildering. It makes it hard to decide what is and is not real. And this is the paralysing condition that besets the State. It cannot make up its collective mind whether the 'excess' is a conjuring trick or hard fact. Is it just the way Ireland is and will be for the foreseeable future? Or is it a little Eden from which, any day now, we will be expelled and thenceforth have to earn our bread by the sweat of our brows? Unearned wealth – and let's be clear that this is what most of this 'excess' corporation tax is – leads to laziness These dual possibilities are the headlights in which the State is caught and frozen. It can neither believe its luck nor discount it. This is the underlying reason for the almost inexplicable inability of a very rich country to reach European standards of infrastructure and social services. Because we don't think the bonanza is real and sustainable, we can't plan to spend it sustainably. Yet because we have this embarrassment of riches, we don't have to think about how we raise and spend money in the normal, tangible Irish economy. Hence, successive governments adamantly refuse to broaden the tax base – why bother taking the risk of upsetting any powerful lobby when you can just watch the billions roll into the parafiscal treasury? Why, indeed, make any real choices at all? Unearned wealth – and let's be clear that this is what most of this 'excess' corporation tax is – leads to laziness. The hard work of reform, of innovation, of articulating priorities and then delivering them, can be shirked. The State needs to pick a side: either decide that the crock of gold will keep renewing itself and invest accordingly, or conclude that leprechaun economics has had its day. Either trust in the paranormal or make the normal fit for purpose.
Irish Times
5 days ago
- Business
- Irish Times
Corporation tax surge a sign investors have not been put off by economic uncertainty just yet
We've all heard the stories about corporation tax , how the boom in tax receipts won't last, and how the Government would be crazy to rely on windfall taxes to fund day-to-day spending. For the moment, at least, the gravy train keeps rolling, as shown in the exchequer returns for June which were published a fortnight ago. Now we have some more detail on what's happening thanks to the Government Finance Statistics for the first three months of this year published by the Central Statistics Office on Friday. As is often the case with statistics such as these, the absolute numbers are important but it's really the change that is relevant. Those changes were almost universally positive for Ireland between January and March. At the end the quarter, total Government revenue stood at €30.9 billion, the CSO said. That was €2 billion ahead of the same time last year driven by an increase in taxes of €1.5 billion and social contributions of about €500 million. Much of the tax increase came about because of a rise in, you guessed it, corporation tax. As Grant Thornton's Peter Vale pointed out, 'a key component' of the €1.5 billion increase in taxes was corporation tax, which was 'up 25 per cent over the prior year after excluding the Apple tax case-related payments. While corporation tax figures remain volatile, they continue to trend upwards,' he added. It's a movie we've seen several times at this stage, but Vale spotted a few other wrinkles in the data that are worth noting. Namely, the sharp jump in income from capital gains tax (CGT) . CGT receipts jumped 64 per cent year-on-year. That's a big rise in anyone's language. While it's true that CGT can be lumpy – all it takes is one or two big transactions to skew the numbers – it does indicate that people are still doing deals. US president Donald Trump made his 'liberation day' tariffs announcement on April 2nd, so its impact is not included in the CSO data. Yet it didn't exactly come out of the blue. He had telegraphed the move for weeks ahead of time. Clearly not everyone has been put off by the 'heightened geopolitical and economic uncertainty' that practically every company or politician seems to be citing these days. Whether that will last is another question entirely.
Irish Times
11-07-2025
- Business
- Irish Times
Ireland's €156bn tax corporate tax bonanza and measuring the tariff threat
Despite all the warnings about corporation tax drying up, Ireland's corporate tax boom has generated €156 billion in just 10 years, figures from the Department of Finance show. Eoin Burke-Kennedy reports. Eoin also breaks down where that corporation tax money has been spent in his column this week. Australian financial services giant Macquarie has agreed to sell Broadstone Housing Investments, its Irish social housing and mortgage-to-rent (MTR) business, to the unit's chief executive. It marks a strategy U-turn for the Australian group, having failed to build up an Irish residential portfolio of scale. Joe Brennan has the story. JP Morgan chief executive officer Jamie Dimon said in Dublin on Thursday that financial markets are too complacent about the outcome of US negotiations with trading partners on tariffs and pricing in a low probability of the Federal Reserve having to hike interest rates again. Joe Brennan was there. One of the country's best known trade unions, Mandate, has suffered a decline in membership of almost a third over five years, its latest returns to the Registry of Friendly Societies indicate. AS Emmet Malone reports, according to the figures provided by the union itself, Mandate had 20,257 members at the end of 2024, down from 29,250 in 2020 and 32,041 two years before that. READ MORE European politicians and diplomats were on standby waiting for word of a breakthrough in the tariff negotiations with the United States, which one official said had entered the 'final phase'. Jack Power reports. Staying with tariffs, in Agenda, Cliff Taylor assesses where the Trump trade policy is headed, and what are the potentail ramifications for Ireland. When Pat Casey joined ServiceNow around two decades ago, he was employee number nine at the digital workflow company. It now has than 26,000 employees worldwide. He talks to Ciara O'Brien about his experiences at the firm. DCC, the Irish conglomerate seeking to narrow its focus to energy, said it still sees its remaining businesses posting 'good operating profit growth' in the financial year to next March, even though its first-quarter earnings were ' modestly behind ' the same period last year. Joe Brennan and Ian Curran have the story. The Club Hotel at Goffs is moving this week to the global IHG franchise , giving it access to millions of potential customers around the world. Barry O'Halloran reports. Grafton shares fell the most in three years on Thursday, after the company did not reiterate its guidance for the rest of the year. Shares in the owner of the Woodies DIY chain slumped as much as 8 per cent in London before paring the loss to 5.6 per cent. Ciara O'Brien reports. In World of Work, Margaret E Ward looks at why workers should think about putting together their own personal risk register - something which companies do as a matter of course - and how it can help them to further their own careers. The main creditor of Powerscourt Distillery is opposing efforts to have an examiner appointed over the business. Hugh Dooley was in court. Irish consumers are paying €1.10 more for a pound of butter than this time last year, according to the Central Statistics Office (CSO). The figure comes as the annual rate of inflation overall edged up to 1.8 per cent in June, from 1.7 per cent the previous month, the lowest reading this year. Excluding energy and unprocessed food, prices in general were 2 per cent higher than at this time last year. Dominic Coyle has the details. The Irish arm of international property company Hines has put an indicative price tag of €64.57m on 113 apartments and studios it is planning to sell for social housing to Dublin City Council. Gordon Deegan reports. If you'd like to read more about the issues that affect your finances try signing up to On the Money , the weekly newsletter from our personal finance team, which will be issued every Friday to Irish Times subscribers.
Yahoo
27-06-2025
- Business
- Yahoo
Trump wins tax breaks for US with threat of ‘revenge' raid on foreign business
Donald Trump has extracted tax breaks for US companies after threatening to impose a 'revenge' levy on foreign businesses that moved money out of the US. G7 countries are to abandon plans to make US companies pay a minimum level of corporation tax in return for Mr Trump dropping the threat of 'revenge tax'. Scott Bessent, the US Treasury secretary, said that he has asked both houses of the US Congress to remove a Trump's tax proposal, known as Section 899, from the budget bill after an agreement with the other G7 countries. Section 899 is part of Mr Trump's 'big, beautiful' tax and spend bill, and would have enabled the US president to retaliate against countries that harm American interests with 'discriminatory' tax policies by taxing any money taken out of the country. The power threatened to be hugely costly to British businesses. Some of Britain's biggest companies, including AstraZeneca, BAE and Barclays, have significant operations in the US that could be at risk of being targeted. Fears had mounted that the powers could be used on the UK as a way of forcing Sir Keir Starmer to water down or abolish Britain's digital service tax, which applies to US tech giants. On Thursday night, Mr Bessent wrote on X: 'After months of productive dialogue with other countries on the OECD Global Tax Deal, we will announce a joint understanding among G7 countries that defends American interests. 'President Trump paved the way for this historic achievement. On January 20, the President issued two executive orders instructing [the US] Treasury to defend US tax sovereignty, and as a result of President Trump's leadership we now have a great deal for the American people.' Mr Bessent said the G7 had agreed not to impose what is known as OECD Pillar 2 on US companies. That refers to a 15pc minimum corporate tax rate, which was agreed in principle by 140 countries to be imposed on companies with global revenues of more than €750m (£639m). The idea was to stop multinationals shunting profits from one country to another to take advantage of lower tax rates. Economists complained that it would be only a matter of time before the minimum rate was hiked, locking countries into ever-higher taxes, globally enforced. Joe Biden was an enthusiastic backer of a global minimum rate of corporation tax. Mr Bessent said: 'By reversing the Biden administration's unwise commitments, we are now protecting our nation's authority to enact tax policies that serve the interests of American businesses and workers.' Mr Trump had claimed that the tax deal 'not only allows extraterritorial jurisdiction over American income but also limits our nation's ability to enact tax policies that serve the interests of American businesses and workers'. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
26-06-2025
- Business
- Telegraph
Trump wins tax breaks for US with threat of ‘revenge' raid on foreign business
Donald Trump has extracted tax breaks for US companies after threatening to impose a 'revenge' levy on foreign businesses that moved money out of the US. G7 countries are to abandon plans to make US companies pay a minimum level of corporation tax in return for Mr Trump dropping the threat of 'revenge tax'. Scott Bessent, the US Treasury secretary, said that he has asked both houses of the US Congress to remove a Trump's tax proposal, known as Section 899, from the budget bill after an agreement with the other G7 countries. Section 899 is part of Mr Trump's 'big, beautiful' tax and spend bill, and would have enabled the US president to retaliate against countries that harm American interests with 'discriminatory' tax policies by taxing any money taken out of the country. The power threatened to be hugely costly to British businesses. Some of Britain's biggest companies, including AstraZeneca, BAE and Barclays, have significant operations in the US that could be at risk of being targeted. Fears had mounted that the powers could be used on the UK as a way of forcing Sir Keir Starmer to water down or abolish Britain's digital service tax, which applies to US tech giants. On Thursday night, Mr Bessent wrote on X: 'After months of productive dialogue with other countries on the OECD Global Tax Deal, we will announce a joint understanding among G7 countries that defends American interests. 'President Trump paved the way for this historic achievement. On January 20, the President issued two executive orders instructing [the US] Treasury to defend US tax sovereignty, and as a result of President Trump's leadership we now have a great deal for the American people.' Mr Bessent said the G7 had agreed not to impose what is known as OECD Pillar 2 on US companies. That refers to a 15pc minimum corporate tax rate, which was agreed in principle by 140 countries to be imposed on companies with global revenues of more than €750m (£639m). The idea was to stop multinationals shunting profits from one country to another to take advantage of lower tax rates. Economists complained that it would be only a matter of time before the minimum rate was hiked, locking countries into ever-higher taxes, globally enforced. Joe Biden was an enthusiastic backer of a global minimum rate of corporation tax. Mr Bessent said: 'By reversing the Biden administration's unwise commitments, we are now protecting our nation's authority to enact tax policies that serve the interests of American businesses and workers.' Mr Trump had claimed that the tax deal 'not only allows extraterritorial jurisdiction over American income but also limits our nation's ability to enact tax policies that serve the interests of American businesses and workers'.
