The Irish finance minister has hailed the €14bn tax windfall from Apple as “transformational” just weeks after the government lost a case in the European court of justice arguing the tech company should keep its money.
Unveiling the country’s budget on Tuesday, Jack Chambers said the money would be used on infrastructure and not splurged on giveaways before the general election, which is expected in November.
Last month, the US tech company lost a high-profile tax battle with Brussels as the European Commission tries to clamp down on “sweetheart” tax deals for multinationals. The ECJ ruled that Ireland had granted Apple unlawful tax breaks and that Ireland was required to recover the money.
“The recent judgment from the court of justice for the European Union has provided the state with one-off revenue that has the capacity to be transformational. We know that the future economic performance of the state will depend on how the public infrastructure programme is prioritised over the next decade,” Chambers told the Dáil on Tuesday.
“It is imperative that this revenue is not used for day-to-day expenditure or to narrow the tax base,” he added.
Instead it would be used to boost infrastructure for water, transport and energy systems along with support in housing to alleviate the crisis that has dominated the government’s near five years in office.
As the UK and other European economies grapple with financial black holes, Ireland suffers an embarrassment of riches with a record €25bn surplus, much of it down to the ECJ ruling last month ordering Apple to make good years of unpaid back tax.
The windfall is being banked in two tranches – €8bn this year and the remaining €6.1bn next year – giving the country’s finance department a projected €105bn in tax revenue for 2024.
Even before the Apple judgment last month, the country’s corporate tax take was ahead, with exchequer receipts 28% up year-on-year, according to government figures released before the budget.
Combined with the one-off revenue from Apple, the expected corporate tax intake for Ireland is €38bn, half of which comes from the top 10 companies, including the tech companies Microsoft and Intel, and pharma multinationals, such as Pfizer.
Chambers reiterated the government’s position that foreign investment was central to the success of such a small economy as Ireland’s. “Our economic enterprise and industrial model is central to future progress. It has transformed our country from where we were 200 years ago.”
The minister said €3bn from the sale of the state’s shares in the Allied Irish Banks (AIB), bailed out after the 2008-09 financial crash, would be made available for infrastructure spending.
With an election looming, the taoiseach, Simon Harris, said before the budget the government would return some money to voters who had faced a cost of living crisis for years.
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“I make no apology, none whatsoever, for giving people a little bit of their own money back between now and Christmas, because that’s the buffer we need to provide people to allow the timeline between inflation falling and bills falling.”
A general election must be held by March 2025 but most analysts see November as the most likely date, when voters will start to benefit from the latest budget spend.
Housing changes included increasing stamp duty, from 10% to 15%, for those bulk-buying houses; a similar increase in tax for homes worth more than €1.5m and an increase in property tax for those owning vacant homes.
Vapers face a new tax on e-cigarettes at a rate of 0.50c per ml of e-liquid.
Chambers said the country was close to achieving full employment since the pandemic but more jobs would be generated by a projected boost of 2.5% in domestic demand in the economy.
The government projected inflation to remain below 2% this year and next. The national debt-to-income rate was down to 69% this year compared with 110% in 2010 and would decline to 56% by the end of the decade, he said.