ANOTHER ARTICLE WARNING that Ireland is relying on corporate tax too much – how shocking.

It would be hard to blame a reader seeing the headline to think along these lines.

After all, a veritable army of smart, serious people in formal wear have been warning about the same things for years and years – Don’t rely on corporate tax. It’s volatile. Ireland’s new-found windfall could disappear ‘overnight’.

Yet Ireland’s corporate tax take just keeps going up – every year for the last 10 in a row. After that long hearing projections of doom, which never materialise into something concrete, it’s understandable that the warnings would become white noise.

But the scale of spending unveiled in Budget 2025 should make even the most jaded observer feel a little twinge of unease to the extent that Ireland is now relying on corporate tax.

It can be hard to get to grips with all the numbers flung around as shiny new tax moves are announced left and right.

For the country as a whole, one of the most important ones is €105.4 billion.

That’s the ‘gross voted total expenditure’ for 2025 – basically, all the money the government plans to spend next year.

It’s a 7% jump compared to 2024, when total expenditure was €98.6 billion.

The 2024 spend was also €2 billion higher than expected – in Budget 2024, the government said it would spend €96.6 billion during the year.

And the 2025 rise comes on top of years of increases – Ireland’s state spending has surged from €84.7 billion in 2020. So the Irish state’s budget has jumped by about 25% in five years.

There’s a trend here – spending is going up quickly. And even though the government pencils in big increases every year, sometimes it’s spending even more again than anticipated.

Extra cash 

So where’s all this extra cash coming from?

Well, tax takes generally are rising across the board. The economy is pretty much at full employment and wages are rising. This means income taxes are rising, as are charges such as VAT, as people continue to spend money.

But this is where we get back to the white noise. The real star of the show, of course, has been corporation tax.

In 2020, this charge brought in €11.8 billion for the Irish state.

In July, the Department of Finance predicted that number would be about €25 billion in 2024, not even counting the €14 billion Apple windfall.

As part of the Budget 2025 documents published yesterday, it revised its estimate up to almost €30 billion this year and predicted the take could jump to €37 billion by 2030.

But how much of this corporate tax is ‘extra’ cash, above what we should normally be getting?

The Department of Finance has tried to figure this out by looking at ‘windfall’ corporate taxes. That is, taxes Ireland gets which are above and beyond the amount considered normal.

It estimated that just under half of Ireland’s corporate tax in 2024 fit into this ‘windfall’ category.

Earlier this year, Ireland was expected to have a budget surplus of about €8.6 billion in 2024. That analysis came out in June – with the higher estimate published yesterday, Ireland’s surplus would be even bigger.

Pretty good – but without the corporate tax ‘windfall’, it is expected the state would have recorded a deficit of almost €3 billion.

Taken together, it shows that the stream of extra cash has let Ireland paper over all kinds of financial cracks.

Seeing as this extra corporate tax money is a ‘windfall’, the logic of most analysts is that it should be treated as something of a one-off.

That is, it should be put into a sovereign wealth fund, or used for major infrastructure projects.

Some of the money is indeed going there.

But a major chunk is being used for day to day spending.

Officials at the likes of the Irish Fiscal Advisory Council have pointed out that the extra ‘temporary’ money is being used to fund permanent spending increases – such as spending more on health staffing.

The worry is that if anything happens to the ‘windfall’ corporate tax take, these permanent measures can’t be unwound quickly.

It would leave Ireland in a position where the state is back running big deficits, and there would likely be major pressures to either raise taxes or cut public spending.

So why worry? 

But despite all the warnings, everything *is* fine. Corporate tax keeps going up, with no sign when it will stop. As mentioned, the Department of Finance expects receipts to keep surging until 2030 at least. So why worry?

Anyone familiar with Ireland’s Celtic Tiger spending habits should know the answer to that question.

Back then, stamp duty on property sales was raking in enormous cash for the state. With house prices going up and up, the state took in more cash.

With no end in sight to the property boom, the government ran surpluses while providing giveaway budgets at the same time. Until it came crashing down during the financial crisis.

As neatly put by ESRI economist Kieran McQuinn earlier this week: “Every year people said they [house prices] can’t keep going up.

“And then they did – but eventually they didn’t”.

The fear is that we’ve learned little from the last crash and something similar could be happening now with corporate tax.

Every year, it seems like they can’t go higher. And then they do. But it just takes one big shock.

It’s a situation which is difficult to conceive of right now.

But as has been pointed out many times before, Ireland’s corporate tax take is subject to a lot of risks.

What if something happens to one of the 10 companies which pays over half of all the state’s corporate tax?

What if Ireland faces a recession?

What happens if international tax rules shift and multinationals stop routing their sales through Ireland?

That last one becomes more likely by the day given how annoyed other European countries are at Ireland’s gigantic Apple tax windfall coming on the back of its corporate tax surge.

But that’s being a party pooper. Who wants to listen to warnings about being prudent, when we read headlines every day about how rich Ireland is?

And besides, the party poopers have been consistently wrong for years on end.

The problem is that they just have to be right once.

As the government continues to throw around corporate tax cash, it will likely take a true shock to the system for Ireland to see how much we really learned from the last crisis.