New numbers from the boffins in the CSO again make a mockery of how we measure economic activity. Sure, on the face of it, last year’s 5.2% GDP growth sounds more reasonable than the make-believe 26.3% recorded in 2015. Remember that prompted Nobel prize-winner Paul Krugman to call out Ireland’s ‘Leprechaun economics’?
Over the years, many economists in Ireland have argued that GNP – which strips out the repatriated earnings of multinationals – is a better measure of our economic progress. According to this measure, growth halved from 18.7% in 2015 to a still-stellar 9% in 2016.
But, even the most sunny-sided economists would struggle to claim with a straight face that this is a good indicator of Ireland’s true rate of economic growth.
*** This article was first published on thejournal.ie on 10 March, 2017 ***
The latest Exchequer returns, released yesterday evening, show total tax receipts were €36.7 billion for the first ten months of the year, 1.7% ahead of target, and 4.7% ahead of the same period in 2015. Overall, the deficit between day-to-day tax and spending continued to narrow, falling from €2.9 billion for the first ten months of 2015 to €1.9 billion for the same period this year.
Corporation tax was €177 million ahead of target in October alone, and is now €821 million ahead for the year, more than one-fifth higher than Department of Finance officials had estimated earlier this year. At €4,778 million, corporate tax receipts for the year to date are on a par with the same period in 2015, being only marginally (€30m) ahead.
These numbers suggest continued strong profitability in the multinational sector, not least due to the large number of big firms relocating to Ireland for tax reasons in recent years. These are the so-called corporate tax inversions, which not only boost the state’s coffers but make it more difficult to accurately forecast this increasingly important revenue source. While these extra revenues are a boon to the Exchequer, their long-term sustainability is questionable in light of ongoing and future changes to national, European and global tax regimes for corporate profits.
*** This article was first published on thejournal.ie on 3 November, 2016 ***