Between €20 and €30bn of total tax revenue highly vulnerable

Between €20bn-€30bn of current total taxation revenue is vulnerable to disappear rapidly in the context of international taxation and trade reforms and from any sudden economic downturn. This vulnerability underscores the need for a broad based and sustainable taxation system.  The potential impact is larger than the 2007 tax revenue collapse and would have very negative consequences.  This vulnerability underscores the need to take urgent steps to develop a broad-based sustainable taxation system. 

These findings in relation from Social Justice Matters 2025 give an indication of how vulnerable Ireland’s taxation revenue is and how big the problem that could rapidly emerge is, depending on how global tax and trade issues play out in the coming months and years. 

Adequacy of Ireland’s total tax take - key findings

• By 2023 total tax revenue was 82 per cent higher than the boom-time peak experienced in 2007. This recovery, while both significant and remarkable, has a number of concerning aspects.
• These suggest that current total taxation levels are fuelled by short-term revenue linked to full-employment, consumption linked to short-term cost of living supports, and windfall revenue from a small number of multi-national companies in the pharma and tech sector.  
• These three elements make our current tax base vulnerable to any economic shocks and to international taxation and trade reforms.
• Latest estimates indicate that between €14-€19bn of annual corporate tax revenue over the period 2024-2030 can be considered ‘excess’, i.e. this revenue stream is short-term and cannot be considered sustainable.  
• Overall, and excluding the €15bn Apple tax settlement funds, between €20bn-€30bn of current total taxation revenue is vulnerable to disappear rapidly in the context of international taxation and trade reforms and from any sudden economic downturn.

A new tax take target should be a policy priority

• A new tax-take target on a per capita basis should be set by Government.  This target should increase each year in line with growth in nominal GNI*.
• Social Justice Ireland proposes that Ireland’s overall level of taxation should reach a level equivalent to approximately €26,800 per capita in 2025 terms.
• This target could yield an additional €26 billion per annum.
• Increasing the overall tax take to this level would require a number of changes and reforms to the tax base and the current structure of the Irish taxation system.
• Gradually increasing the overall taxation revenue to meet this new target would represent a small overall increase in per capita taxation levels and one that is unlikely to have any significant negative impact on the economy.
• Reaching that level would provide a lot more recurring sustainable revenue for the state to invest in public services and improved living standards for all.

These figures may look large, they should be understood in the context of current windfall taxes from corporations, which are being mostly spent, dramatically reduced income tax levels over recent years, a narrow tax-base, and persistent deficits in the provision of public services and infrastructure.

The findings from ‘Social Justice Matters: 2025 guide to a fairer Irish society’ indicate the need to prioritise the Programme for Government commitment to maintain a broad tax base.  The first step should be a revised tax take target on a per capita basis to ensure a sufficient tax take.  Our economy and society require strong and well-resourced social infrastructure and services, and clarity regarding on-going resourcing is required.  Current instability around global tax and trade makes this a core policy priority. 

Social Justice Matters: 2025 guide to a fairer Irish society is available to download here.