A fifth of Ireland’s workers, and just 10 firms, account for 36% of all the country’s tax take, an Oireachtas committee has heard.
In discussing the uncertain or adversarial nature of the state’s tax regime with the Public Accounts Committee, officials from the Department of Finance said that the top 25% of earners account for 80% of income tax in Ireland.
This figure is largely attributable to the large wages paid to workers in the technology sector, said the department’s chief economist John McCarthy, leaving Ireland vulnerable to a substantial blow to the technology sector.
In recent weeks, mass redundancies have been seen at three of the biggest players in Ireland’s tech sector – Meta, Twitter and Stripe.
Department of Finance chief secretary John Hogan said he still expected to see a rise in corporation tax in 2023, but said his department had caused concern in taking up corporation tax in order to mitigate the disruption caused. from any loss on the company’s tax bills. adding the cost of such careful action is “worth paying for.”
McCarthy said in terms of corporation tax that he is “not at all worried about this year”.
“I’m more worried about the later years, especially if there’s an ICT shake-up [information communications technology] sector,” he said, adding that given so many high-income jobs will be found in technology that represents a “very narrow base” for tax bills.
He said that although the department had factored in a shake-up in the ICT sector, layoffs at major technology companies since the budget was announced on September 27 had been “stronger than we might have thought”.
He said that the 2024 corporate tax levy would appear to be more at risk due to the slowdown being seen in the technology sector.
The chief economist added that Ireland’s rainy day fund had been increased by €2 billion in 2022 and will see an additional €4 billion in 2023 in preparation for that expected slowdown.
Meanwhile, committee vice-chair Catherine Murphy asked Mr Hogan how “very expensive courses” are signed off for senior civil servants.
Ms Murphy had recently tabled parliamentary questions asking various departments how many of their staff had attended the Harvard Business School business management program in the US, after which it emerged that Des Carville, head of state investment banking Irish, had taken a course costing €61,500 in 2021.
This cost was shared between the Department of Finance and the National Treasury Management Agency.
Mr Carville came into the limelight recently when the latest damning report into the sale of services company Siteserv to billionaire Denis O’Brien warned of his conduct and said he had on two separate occasions disclosed “highly confidential” information about that agreement.
Mr Carville had been employed with Davy Stockbrokers at the time.
Mr Hogan said it was “usually the line manager” who approved such courses and “the individual would have approached my predecessor” – Derek Moran, who retired as general secretary in July 2021 – to seek approval .
He said it was “very appropriate to encourage” civil servants to take such courses so they could “see new ways of thinking”.
He said in the case of the expensive courses there was a “kickback” for any employee who subsequently left the civil service and said he had signed pledges not to quit when taking his courses.
Mr Hogan admitted that the course in question was probably the most expensive he had come across.
“From memory it would be,” he said.
