A fifth of Ireland’s workers, and just 10 firms, account for 36% of the country’s entire tax intake, an Oireachtas committee has heard.
In discussing the precarious nature or otherwise of the State’s tax regime with the Public Accounts Committee, officials from the Department of Finance said the top 25% of earners account for 80% of the income tax in Ireland.
That figure is largely attributable to outsize salaries paid to workers in the tech sector, the department’s chief economist John McCarthy said, with that fact leaving Ireland vulnerable to a fundamental shock in the tech sector.
In recent weeks, mass layoffs have been seen at three of the largest players in Ireland’s tech sector — Meta, Twitter, and Stripe.
Department of Finance secretary-general John Hogan said that nevertheless he expected to see an increase in corporation tax in 2023, but said his department has factored in disturbances to corporation tax intake in order to smooth the disruption caused by any loss in company tax receipts, adding the cost of such a prudential action is “worth paying”.
Mr McCarthy said in terms of corporation tax he is “not at all worried about this year”.
“I’m more worried about later years, especially if there’s a shock to the ICT [information communications technology] sector,” he said, adding that given so many high-income jobs are to be found in tech that represents a “very narrow base” for tax receipts.
He said even though the department had factored for a shock to the ICT sector, nevertheless the layoffs at big tech companies since the budget was announced on September 27 has been “stronger than we might have thought”.
He said 2024’s corporation tax intake would appear to be most at risk due to the slowdown being seen in the tech sector.
The chief economist added Ireland’s rainy day fund had been topped up with €2bn in 2022, and will have a further €4bn added in 2023, in preparation for that expected slowdown.
Meanwhile, committee vice-chair Catherine Murphy asked Mr Hogan how “very expensive courses” for senior civil servants are signed off upon.
Ms Murphy had recently lodged parliamentary questions asking various departments how many of their employees had attended the management business program at Harvard Business School in the US, upon which it emerged that Des Carville, the department’s head for State investments in Irish banks, had taken a course costing €61,500 in 2021.
That cost was split between the Department of Finance and the National Treasury Management Agency.
Mr Carville came to public notice recently when the recent damning report into the sale of services company Siteserv to billionaire Denis O’Brien admonished his conduct, and said he had leaked on two separate occasions “highly confidential” information regarding that deal.
Mr Carville had been employed with Davy Stockbrokers at the time.
Mr Hogan said it was “usually the line manager” who approves such courses, and “the individual would have approached my predecessor” — Derek Moran, who retired as secretary-general in July 2021 — in seeking approval.
He said it was “very apt to encourage” civil servants to take such courses in order for them to “look at new ways of thinking”.
He said in the case of expensive courses there was a “clawback” for any employees who subsequently leave the civil service, and said he had signed commitments not to leave himself when taking courses of his own.
Mr Hogan admitted the course in question was likely the most expensive he had come across.
“From memory it would be,” he said.
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