All signs suggest corporate tax revenue will ‘continue to rise’, says MacGill Summer School – The Irish Times
All signs suggest that investment by multinationals in Ireland and revenue from the state’s corporation tax will continue to rise despite concerns to the contrary, said former chairman of Ireland’s Tax Advisory Council Seamus Coffey.
Mr Coffey was taking part in a panel discussion at the MacGill Summer School in County Donegal on Friday on whether a global recession is inevitable and what the consequences would be for the Irish economy and global trade if it does.
The Central Bank has warned in recent weeks that up to €8 billion, or just over half of the government’s corporate tax revenue, could be ‘unsustainable’ or at risk due to their concentration between only 10 large multinationals.
However, Mr Coffey argued on Friday that investment by multinationals in Ireland is “just as likely to continue to rise as to fall”.
‘Over the last 10 to 15 years there have been frequent dire omens that many tax changes or corporate restructurings were going to drive investment out of Ireland,’ he said.
“Each time the opposite has happened. There has just been more investment. We continue to see significant multinational investment.
“If you get down to Cork City and drive around the outskirts you occasionally pass what was once a farm but is now a multi-billion dollar pharmaceutical company.
“These companies have invested one, two, three, four billion dollars in a factory with a manufacturing cycle of 10 to 12 years. These factories are being commissioned now, so they will be in operation until the 2030s, and they will need to be staffed.
“Is there a threat from this concentration? Maybe, but everything points to a positive direction.
Speaking on the same panel, Ibec chief executive Danny McCoy said current inflationary pressures in the global economy could be traced to the initial onset of the Covid-19 crisis. “Too little is being diagnosed in what happened at the start of Covid,” he said.
“We all thought the right thing to do was to pump money into the global system to keep people liquid, to keep them home, and to get through these very temporary few weeks or months.
“It was gargantuan, the scale of it. To use just one indicator from the Fed, of all the US dollars ever created, 40% were created in those six weeks. It’s in the story.
“The scale of money flowing into the global financial system has been gargantuan, and it has been sitting in the patient for too long, for two years.
“The consequences of this against a world that is ruled by intangibles can be seen by those tech companies that have tripled in value over the past two years.
“But it wasn’t just in these societies. The magnitude of this money has found its way into households around the world. There is still far too much money in the global system. Central banks around the world have been slow to react to this problem.
“But the bottom line is that the sheer amount of money still in the system has resulted in excess demand all over the world right now. Excess demand comes in three forms: price trends, rationing, and scarcity. »