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Will the Budget address corporation tax uncertainty?

AIB's David McNamara said a plan over the short to medium term to close the underlying deficit that's opened up in the last few years would be prudent
AIB's David McNamara said a plan over the short to medium term to close the underlying deficit that's opened up in the last few years would be prudent

Ahead of Budget 2026, AIB's Chief Economist said he would like to see a plan in the budget to reduce Ireland's reliance on corporation tax receipts.

The country's high corporate tax receipts are tied to global economic shifts and US trade policy.

Currently around one third of excess corporation tax receipts are being saved.

David McNamara said a plan over the short to medium term to close the underlying deficit that has opened up in the last few years would be prudent.

"We need to be really cautious in the next few years with our fiscal policy, it's not that long ago since we were facing a significant fiscal crisis and we can see that in other European countries at present," said Mr McNamara.

He said that while the economy is performing well, he advised that the Government needs to save the majority of excess corporation tax receipts that have been received into the Exchequer in recent years.

"To give the Government credit, in the last few years they have set up two new sovereign wealth funds. The expectation is that those funds will have roughly €20 billion by the end of next year," he said.

"Roughly half of our corporation tax receipts, €30 billion last year, are termed windfall by the Department of Finance. So what I'd like to see in the budget is a plan over the next few years to reduce our reliance on those excess corporation tax receipts," he added.