Ireland is wondering what to do with its budget surplus

As a tax haven for multinationals in Europe, Ireland has achieved record corporate tax revenue. To the extent that I don’t know what to do with this waste of money anymore.

What to do with the budget surplus of 10 billion euros? In many countries, such as France, in continuous deficit since 1974, the question may be surprising. However, in Ireland, it has been debated for months.

According to data from Financial Times Broadcast by International mailIreland’s budget surplus is expected to reach €8 billion in 2022 and €10 billion this year.

This sudden drop, Ireland owes in large part to the good post-Covid results of tech and pharmaceutical multinationals established on its territory. It has to be said that the Emerald Isle is particularly attractive to large groups with its low corporate tax rate (12.5%, compared to 25% in France). Corporate tax, which accounts for two-thirds of its revenue from ten corporations, is the second source of state revenue after income tax.

“As a country, we live in an unusual situation: we live within our means,” says Irish economist Seamus Coffey.Irish selector. Politicians wonder the best way to allocate a surplus budget.

Build a house or invest in sovereign wealth funds?

Faced with a housing crisis affecting the country and particularly the capital city of Dublin, opposition parties are suggesting that this tax kitty be used to build housing. Not so simple, answers BBC Professor Alan Barrett at the Dublin Institute of Economic and Social Research. The latter recalled that Ireland was at full employment, so it would be difficult to find the necessary labor to carry out a large housing or infrastructure construction project.

For its part, the Armed Forces Committee has called for an increase in the Irish military’s budget, which is currently the lowest in the EU (0.3% of GDP in 2022). But the government is pleading for another solution, debated in the Irish parliament a few weeks ago: reinvest exceptional tax revenue into a sovereign wealth fund that would make it possible to pay pension and health costs in an aging population.

However, nothing is resolved at this point. The debate will continue and Ireland’s multi-year budget surplus could rise to €65bn in 2027.