Corporation tax set for big fall

J

joe sod

Registered User
Messages
2,211
With the retrenchment of the big tech companies operating in Ireland and the falling revenue and job losses how fast will the corporation tax receipts hit the government. Companies like Intel especially seem to be in trouble and the turnaround in their fortunes is very rapid. Last year the government received 22 billion euros from corporation tax, thats alot of money. The total social welfare budget for 2023 is 23 billion euros therefore the total corporation tax receipts essentially pays for the entire social welfare budget, where will the government get this money when it is no longer been generated from corporation tax?
 
You should read the budget speech . It was acknowledged that 8-10B of the corporation tax take could easily disappear and shouldn’t be replied on for day to day spending .

Whether they will do this or not is another question
 
The likes of Intel are not "in trouble". They are still vast multi billion dollar organisaations making massive money.

What has happened is that as a legacy of lockdown, strategic decisions were postponed and are now all coming out together from the big firms. In addition, a lot of companies have realised that as a result of homeworking, they can be more efficient and have released staff as a result. Homeworking has really changed work for a lot of people and made it far more outcome based then 9-5 and I know in the case of my own employer, it's really opened up our eyes to passengers and people and processes we don't need and we've responded accordingly. That's reflected in short term quarterly hits to result

This has also made companies realise that they don't necessarily need big offices, that staff can work from anywhere in the world. You don't need an office housing 5000 people in Silicon dock, they can work from home, hot desk in the office when needed etc etc.

The impact on that, in the long term, will hit Corporation tax, employer PRSI etc but in time, should also have an impact on housing needs
 
Peanuts20 said:
Homeworking has really changed work for a lot of people and made it far more outcome based then 9-5 and I know in the case of my own employer, it's really opened up our eyes to passengers and people and processes we don't need and we've responded accordingly. That's reflected in short term quarterly hits to result
Click to expand...
I actually made that point 2 years ago in the post about WFH and covid and was ridiculed for it. So now when things get tight companies are finding its easier to get rid of these jobs as the job becomes much more results based when workers not every day in the office.

As for Intel their share price is 40% of where it was 2 years ago, it has cut its dividend in half and laying off workers. Its fairly understandable that they will be paying little if any corporation tax to the government this year
 
Peanuts20 said:
The likes of Intel are not "in trouble". They are still vast multi billion dollar organisaations making massive money.
Click to expand...
Companies with massive R&D budgets and the resulting massive capital burn need to generate massive amounts of cash. If they don't, even for a few years, it can have catastrophic results.
 
Peanuts20 said:
The likes of Intel are not "in trouble". They are still vast multi billion dollar organisaations making massive money.
Click to expand...
Correct. And in spite of some high profile tech layoffs, many other companies are still crying out for tech skilled workers and are very happy to facilitate WFH or hybrid roles especially for software developers/engineers.
 
ClubMan said:
Correct. And in spite of some high profile tech layoffs, many other companies are still crying out for tech skilled workers and are very happy to facilitate WFH or hybrid roles especially for software developers/engineers.
Click to expand...
There is always a shortage of software guys and engineers, it's people lower down the line that are getting layed off if they cannot show productivity.
The issue for the Irish government isn't unemployment necessarily but the fall in revenue if all these companies are not making much money now. Pascal Donohoe might have telegraphed the prospect of up to 10billion euros loss in corporate tax receipts however I doubt the Irish government is building up huge budget surpluses as a result of the corporate tax bonanza. They are expecting 100,000 refugees over the next year that's a huge government spending commitment that was not foreseen a year ago
 
joe sod said:
There is always a shortage of software guys and engineers, it's people lower down the line that are getting layed off if they cannot show productivity.
The issue for the Irish government isn't unemployment necessarily but the fall in revenue if all these companies are not making much money now.
Click to expand...
Well, if they're cutting unproductive staff/roles then that should bode well for making money?
 
joe sod said:
With the retrenchment of the big tech companies operating in Ireland and the falling revenue and job losses how fast will the corporation tax receipts hit the government. Companies like Intel especially seem to be in trouble and the turnaround in their fortunes is very rapid. Last year the government received 22 billion euros from corporation tax, thats alot of money. The total social welfare budget for 2023 is 23 billion euros therefore the total corporation tax receipts essentially pays for the entire social welfare budget, where will the government get this money when it is no longer been generated from corporation tax?
Click to expand...
Yeah we are in huge trouble, our tax take is over reliant on Tech, Pharma, and Med Tech. Doomed I tell you.
 
I see the ntma are doing a bond auction this Thursday their first foray into the markets this year. They are looking to raise 10 billion euros this year from the bond markets , probably to roll over maturing debt. However this time they will be paying circa 3.2% interest rates a big jump up from the almost zero rates they were getting during covid.
Should they not having been using the corporation tax bonanza to pay off maturing debt rather than issuing new debt if they knew the corporation tax bonanza was running out?
 
Tech is only a part of the mix and not as big as many think. Pharma is far bigger and growing at a strong rate.

And unlike tech, most pharma actually manufacture the products here too.

Then you have less obvious sectors - Kellogg's hq is here, coca-cola concentrates are here (and made here) and even the giant Chinese fashion retailer Shein is based here for their international operations.

A few tech companies pulling back on their excessive growth of the last couple of years will have little affect - might even be positive as the changes should ensure bigger profits
 
peemac said:
Tech is only a part of the mix and not as big as many think. Pharma is far bigger and growing at a strong rate.

And unlike tech, most pharma actually manufacture the products here too.

Then you have less obvious sectors - Kellogg's hq is here, coca-cola concentrates are here (and made here) and even the giant Chinese fashion retailer Shein is based here for their international operations.

A few tech companies pulling back on their excessive growth of the last couple of years will have little affect - might even be positive as the changes should ensure bigger profits
Click to expand...
MNC companies employ around 32% of the workforce in the corporate sector and 53% of employee taxes in the corporate sector. That's the wealth creating sector, the engine of the rest of the economy. It's the difference between 1983 Ireland and 2023 Ireland. The employee related tax receipts from that sector are critical to the State.
 
joe sod said:
I actually made that point 2 years ago in the post about WFH and covid and was ridiculed for it. So now when things get tight companies are finding its easier to get rid of these jobs as the job becomes much more results based when workers not every day in the office.
Click to expand...
You were ridiculed for saying we'd all be forced back into the office as we could not be productive or innovative or collaborative at home.
 
You must log in or register to reply here.
Back
Top