IFAC on Apple tax: 'Spend it, save it or cut debt'
Two Q&As were prepared for Séamus Coffey as he got ready to appear before a committee on budgetary oversight in early July.
One section highlighted issues that were likely to be 'pertinent now' while another looked at questions that arose 'consistently.' On what to do with the €13.8bn Apple tax windfall, a suggested answer for Mr Coffey said to remember the government 'is not stuck for cash.' It said: '[The state] is stuck for its capacity to spend it on things we all want. There are three broad options – spend it, save it, [or] cut debt.' The Q&A said spending it on housing was easier said than done as the biggest issues were 'construction sector capacity and planning bottlenecks' not the availability of cash.
If asked about the budgetary implications of migration, the briefing for Mr Coffey said there had been 'large increases' in numbers coming to Ireland in recent years.
It said: 'This has meant the labour force and employment has been able to grow as rapidly as it has in recent years.
'[Around] €2.1bn has been set aside for humanitarian assistance to refugees this year (€0.8bn of this is for Ukrainian refugees). In terms of future costs, these are uncertain.' The Q&A said that getting migrants integrated into employment and their own homes would reduce costs for the government.
'An increased supply of housing would mean some of the more expensive means of accommodation (hotels] may be replaced,' it said.
On cost-of-living supports, which have been a major feature of recent budgets, the IFAC briefings said these cost increases were now 'likely permanent.' The Q&A said: 'There is probably less of a case for once-off measures this winter. Permanent increases in social welfare could be targeted at specific groups. However, the measures have seldom been targeted.' Mr Coffey was also briefed on employment in construction and whether we needed more people working in that sector.
'Just over six per cent of all employment is in the construction sector. Over the period 2005 to 2007, this reached over ten per cent. This may have been unsustainable, however.' The briefing added: 'Mention productivity, can we get more output from the same workforce?' A Q&A on broader questions highlighted the challenges in creating a wealth tax that would be fair, not become an administrative burden, and collect enough money to make it worthwhile.
On how to fix repeated overruns in health spending, the briefing said that 'poor budgeting' was a problem but that there was also evidence of 'reduced productivity.' It also explained how Ireland's failure to meet its climate targets carried a very real 'fiscal risk.' The Q&A said the country had already foregone €500m from carbon credits it was entitled to sell and that costs of non-compliance were in the range of €8bn and €26bn.
The document said: 'While several [EU] member states are projected to fall short, the potential costs are significantly higher for Ireland relative to the size of its economy.' Asked about the records, IFAC said they had no further comment to make.
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Irish Examiner
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Irish Times
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The Apple tax windfall, the budgetary impact of migration and value for money in the health service were likely questions flagged to Irish Fiscal Advisory Council (Ifac) chairman Seamus Coffey in briefings by his officials in advance of an Oireachtas appearance. Two Q&A documents were prepared for Mr Coffey in advance of the meeting of the committee on budgetary oversight in early July – one highlighting issues likely to be 'pertinent now' while the other looked at questions that arose 'consistently. 'On what to do with the €13.8 billion Apple tax windfall, a suggested answer for Mr Coffey said to remember the Government 'is not stuck for cash.' It said: '[The State] is stuck for its capacity to spend it on things we all want. There are three broad options – spend it, save it, [or] cut debt.' READ MORE The Q&A said spending it on housing was easier said than done as the biggest issues were 'construction sector capacity and planning bottlenecks' not the availability of cash. If asked about the budgetary implications of migration, the briefing noted there had been 'large increases' in numbers coming to Ireland in recent years. 'This has meant the labour force and employment has been able to grow as rapidly as it has in recent years,' it said, before noting that around €2.1 billion 'has been set aside for humanitarian assistance to refugees this year (€800 million of this is for Ukrainian refugees). 'In terms of future costs, these are uncertain,' the briefing note added. The Q&A said that getting migrants integrated into employment and their own homes would reduce costs for the Government. 'An increased supply of housing would mean some of the more expensive means of accommodation [hotels] may be replaced,' it said. On cost-of-living supports, which have been a big feature of recent budgets, the Ifac briefings said these were now 'likely permanent'. 'There is probably less of a case for once-off measures this winter,' the briefing document said. 'Permanent increases in social welfare could be targeted at specific groups. However, the measures have seldom been targeted.' Mr Coffey was also briefed on employment in construction and whether we needed more people working in that sector. 'Just over 6 per cent of all employment is in the construction sector,' his Q&A document noted, adding that between 2005 and 2007, this had reached over 10 per cent. 'This may have been unsustainable, however,' the briefing added, advising Mr Coffey to 'mention productivity, can we get more output from the same workforce?'. A Q&A on broader questions highlighted the challenges in creating a wealth tax that would be fair, not become an administrative burden, and collect enough money to make it worthwhile. On how to fix repeated overruns in health spending, the briefing said that 'poor budgeting' was a problem but that there was also evidence of 'reduced productivity'. It also explained how Ireland's failure to meet its climate targets carried a very real 'fiscal risk'. The Q&A said the State had already forgone €500 million from carbon credits it was entitled to sell and that costs of noncompliance were in the range of €8 billion and €26 billion. 'While several [EU] member states are projected to fall short, the potential costs are significantly higher for Ireland relative to the size of its economy,' the briefing noted. Asked about the records, Ifac said they had no further comment to make.
