THERE WILL BE resistance within certain government ranks that some of the high-level corporation tax take will not be used in next week’s Budget.

The latest Exchequer figures showed that cumulative corporation tax receipts at the end of September amounted to some €5.16 billion – up 10.5% – or €306 million, ahead of expectations.

It is understood a memo brought to Cabinet this week outlined that the Finance Minister Paschal Donohoe will comment later this week on a further large corporation tax windfall.

November is traditionally a strong corporation tax take month.

It is believed questions have been raised ahead of the publication of Friday’s White Paper – which sets out the expected expenditure and revenue for next year – as to whether some of the corporation tax take can be used to enrich the State’s coffers.

Donohoe’s options are also limited in next week’s Budget due to tax revenues being down marginally against expectations. 

For the latest three month period to September, tax revenues were €296 million lower than expected, while spending excluding interest payments was €133 million higher than expected in the past three months.

With pressure on the minister to increase spending in areas such as health and housing, and with taxes slightly down, it is certain the issue of corporation taxes will be raised, said sources.

However, it is believed that the Department of Finance and Expenditure has ruled out any such suggestion that the excess tax take from multinationals can be used for current expenditure. 

In his summer economic statement, Donohoe outlined that any increases in corporation tax will be set aside and put into the State’s so-called Rainy Day Fund.

The government has been repeatedly warned not to rely on corporation tax – and this measure was announced to offset that.

It is understood that ministers were briefed in a memo that due to the unreliable source of the revenue the government will not be using it to fill some of the general tax shortfall due to such windfalls not being an “absolute guarantee” year on year.

During the summer, the finance minister said he wanted to maintain a broad tax base that “generates a sustainable revenue stream necessary to fund public services”.

“We cannot build permanent expenditure commitments on revenues that may not be sustainable. We do not need history to tell us this, it is common sense,” said Donhoe. 

He added that recent political developments in the region show that there are real vulnerabilities. He said the establishment of the Rainy Day Fund will build up Ireland’s fiscal reserves “so that we have room for manoeuvre in the event of a major shock to the economy”.

Speaking at the Fine Gael parliamentary party meeting last night, Taoiseach Leo Varadkar warned against expectations of big spending announcements next Tuesday, stating that the government had committed “a lot of finance already” towards public projects and services as part of the process to “de-dramatise Budget Day”. 

Varadkar said the government didn’t want any repeat of the cycle of austerity of the past and said measures to put money into people’s pockets would be “modest” but on top of recent Budgets, it would all add up.