My Department, like finance Ministries elsewhere, is assessing the potential impact of tariffs on our economy. The assessment of our economic outlook, which will incorporate the latest developments in the global economy, will be set out in the spring forecast, which will be published in April. From an economic perspective, the US is our largest bilateral trading and investment partner. In 2023, the latest year for which data are available, Ireland recorded a goods-trade surplus of €50 billion with the US. On the other hand, it ran a services trade deficit of €134 billion with the US across that year. As a result, Ireland recorded an overall trade deficit of €84 billion with the US. The Government has taken careful note of President Trump's decisions in respect of tariffs in recent days and the agreement to postpone tariffs on Mexico and Canada by 30 days. We regret the imposition of tariffs. Our view is that they create economic disruption and drive up inflation, damaging those on all sides. Moreover, it is clear that the global economic landscape is changing quickly and the new normal we are about to move into will be very different from what we have had in recent decades. Our economy has benefited enormously from the global economy getting closer. As a major beneficiary from these positive dynamics, the Irish economy is exposed to any potential reversal in global trade. From a policy perspective, the best way to respond to these trends is to focus on those policy decisions that we can control and influence. That is why our competitiveness is so important and why investing in our future remains essential.
Sentiment score: 0.14
As I said to the Deputy, the analysis with regard to this is under way. Owing to the uncertain environment we are in, it is appropriate that a number of weeks be taken to do this work. That work will be concluded and published in April. On the imposition of tariffs under the first President Trump Administration, two learnings emerged. First, the EU did respond. The EU has indicated it will respond again in a firm and proportional way. Second, we did see across the period in question that the trading relationship and the flow of goods and services between the US and the EU continued to be strong and, I believe, to benefit both sides of the Atlantic. It remains to be seen whether that is possible in the future. On the point the Deputy made about our reliance on corporate tax, our reliance is why I have made the case for running budget surpluses and why we have set aside money in our two reserve funds. Maybe the Deputy might clarify her position on running budget surpluses and putting money into these funds. The question of reliance is why measures such as broadening our tax base through the changes we are making in carbon taxation continue to be essential.
Sentiment score: 0.05
The Deputy put a set of questions to me and I answered them. She wanted to know whether we are particularly exposed to changes happening in global trade, and I said we are and outlined why. She asked if there is an analysis under way to consider risks we face. I confirmed there is, told the Deputy when it would be complete and told her how it would be published. That work is all under way. On the challenges we face because of potential shocks to global trade and what they could mean to our economy, we do have a very strong pillar in our economy created by foreign direct investment. We also have a thriving domestic economy, a non-traded economy, and a food sector that continues to bring great benefits to our society and economy. We will continue to support those pillars of our economy as well. We are facing uncertain times, and on that I very much agree with the Deputy, but I do not see the magnitude of the uncertainty posing a threat to our sovereignty, as the Deputy has suggested. However, we will have choices and decisions to make.
Sentiment score: 0.06
As the Deputy will be aware, in making any decisions on VAT rates or other taxation measures, the Government must balance the costs of the measures in question against their impact and the overall budgetary framework. The programme for Government is clear. It commits us to introducing measures to support SMEs, in particular in the retail and hospitality sectors. It acknowledges the increased cost pressures on these sectors and states that this will entail changes to VAT, PRSI and other measures. The programme makes it clear that these measures will be implemented as part of the normal budget process. This process will consider the timing of any VAT change as well as its scope. The Government is very conscious of the pressures faced by businesses in the hospitality sector, and that is why we provided for a 9% VAT rate from 1 November 2020 to 31 August 2023, at a cost of over €1.3 billion. It is also why we introduced other measures, such as the increased cost of business grant and the power up grant. I wish to reaffirm, given that it is included in the programme for Government, that any such changes are matters for the budgetary process and will be dealt with on budget day.
Sentiment score: 0.25
I absolutely appreciate the value of the 9% hospitality rate and the help it can offer to the hospitality sector. I understand that 9% is the rate that can have the biggest effect. The timing of this relates to the fact that it will be a significant move. If a move is made - and my view is that when we decide the scope of that move, it should be concentrated on the food and catering sector - its overall cost in a full year will be €675 million. That is a very big decision to make. Decisions of that scale should be confined to budget day. In recent years we have had to make many significant decisions outside of the normal budgetary process. Doing that is no longer appropriate in the context of where we are now because of all the risks around us. I understand the value of the 9% rate. My view is that it should be concentrated on those parts of the economy where it can deliver the biggest benefit. Because of the scope and scale, however, it needs to be a decision that is made on budget day.
Sentiment score: 0.14
I understand the value of the 9% VAT rate. It is my intention to be able to deliver such a move, but such a move would entail a significant cost, which is why it needs to be part of the overall budget process. As to what that VAT rate will be applicable to, my view is that it can have the biggest impact on food and catering, as I made clear in my earliest answer to the Deputy. The expansion beyond that would entail additional significant cost, and it is because of all this that we need to make those decisions as part of the normal budgetary process. We cannot be spending hundreds of millions of euro and even more outside of the normal budgetary decisions we make because of the risk and the uncertainties around us. I want to confirm what my intention is as regards the VAT rate but indicate that this decision should be taken on budget day. Because it will be taken on budget day, any effects will be felt in the following year, from 1 January.
Sentiment score: 0.10
That is not the question the Deputy put to me. The question he put to me-----
Sentiment score: 0.00
No. Let us be clear. The question the Deputy put to me, which is the question I will answer initially - I will go on to clarify - reads: "To ask the Minister for Finance if he will outline Exchequer returns and tax receipts for January 2025 ... " That is the question that was put to me, and I will answer it. I am happy then to elaborate beyond that on the further points the Deputy has made. The Exchequer returns that were published last week show a broad continuation of trends observed over the course of the past few years, with the public finances - at least in headline terms - in a relatively healthy position. Tax revenues of €8.4 billion were collected in January, 7.2% up on the same month last year. When one-off revenues arising from the Court of Justice of the European Union ruling of 10 September 2024 are included, our tax revenues in January amounted to over €10 billion. Income tax and VAT recorded steady growth in January, signalling the overall strength of our economy. On the other side of the equation, total gross voted expenditure to the end of January amounted to €9.2 billion, an increase of 22.7% on the same month a year ago. Taking into account other factors such as non-tax revenue and non-voted expenditure, an underlying surplus of €1.8 billion was recorded for January. This rises to €3.6 billion if the Court of Justice of the European Union receipts are included. This is not a source of complacency. Much of the budget surplus at present reflects the strength of corporation tax revenues, which are heavily concentrated among a small number of firms and sectors.
Sentiment score: 0.24
The Deputy has been against every attempt to broaden the tax base. He is against all our attempts to do that. He is against carbon tax. He is against local property tax. I ask him not to stand up here and point out to me the dangers of a narrow tax base when he is against any efforts to widen it. He has been against our running budget surpluses, which are in place to deal with the very kinds of risks that could materialise. While we have increased public expenditure in recent years to respond to the many challenges we have faced and the many needs within our society, we, and I in particular, have also made the case for running budget surpluses to give us the flexibility for what the future could bring. The Deputy has been against doing that. I ask him not to stand up here now, newly aware of the risks in the world economy, and point out to me what we should have done in the past when he has been against doing it. We will engage with the US as members of the European Union in our meeting of finance ministers in Brussels on Monday and Tuesday, when we will consider this issue further.
Sentiment score: -0.02
We got a real insight into the thinking of Deputy Tóibín and Aontú there. He characterised foreign direct investment as transitional investment in jobs. Is he going to tell the people who work for the semiconductor sector here that their jobs are transitional?
Sentiment score: 0.00
When he leaves Leinster House later, is he going to go down to the docks on the north side and the south side-----
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It is what he is saying.
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A moment ago he described that investment as transitional investment. I invite him to visit our life science sector, which is located across the length and breadth of Ireland-----
Sentiment score: 0.08
-----to go down to the financial services sector------
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-----to go into the manufacturing jobs-----
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-----that are located in his constituency and near it.
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He should walk into those workplaces and tell those people that their jobs are transitional.
Sentiment score: 0.00
We got an insight into the thinking of Aontú there. The Deputy went on to say we are outsourcing our sovereignty. That is the thinking of the 1950s and 1960s. It is not the thinking that has enabled this country to grow its prosperity. It is not the approach that will help us navigate our way through the challenges that are there.
Sentiment score: 0.09
I thank the Deputy for his question on this very important topic. At least he has a recognition of the value of organisations like the OECD. As to where we are, as the Deputy outlined Ireland signed up to a global tax deal. We did so in October 2021, as he is aware. That was part of an overall inclusive framework on base erosion and profit shifting as part of the G20 and OECD agreement. Ireland signed up to this as a pragmatic and sensible approach to address global uncertainty and provide the positive conditions and long-term certainty for businesses and investors to prosper and grow. Pillar 1 is a package comprised of amount A, which will see an allocation of taxing rights to market jurisdictions, and amount B, which will see a simplification of transfer pricing rules. Technical work on pillar 1 is well advanced, but there are a number of outstanding issues on amount B that have led to the emergence of a political impasse on the package as a whole. The implementation of pillar 2 of the agreement is more advanced. That refers to the minimum effective tax rate, which the Deputy is aware of. We have implemented this along with major economies such as Japan, the UK, South Korea, Canada and Australia and many of the other economies within the European Union through the minimum effective tax directive. I note the decision of the US Administration in relation to the OECD agreement and the presidential memorandum issued on 20 January. This is of course a regrettable decision, but opportunities exist to engage with the new administration to explore a path forward. The Deputy asked how we will do that. The best framework for doing that continues to be inside the OECD. I very much hope President Trump's Administration can see the benefits of an organisation like that which contains so many developed economies across the world. The second, very brief, point is we should continue to strengthen our participation in the OECD through the work of the European Union. These are the kind of issues we will be discussing in Brussels on Tuesday in particular.
Sentiment score: 0.43
Our intent very much is to engage with the United States with a view to making the case to it for continued participation in the OECD framework. That is the outcome we will seek to achieve. I fully acknowledge the difficulties that will be there with regard to that given what President Trump and the Department of the Treasury have already indicated. Are we looking at what the consequences of other outcomes could be? We are considering that, but I must be frank with the Deputy that it is very early days in terms of trying to be clear what the United States may well do. Given we are going to be involved in a very important engagement with it, it is important for me to emphasise the value of the US being in this framework. The Deputy is correct that because this is an agreement that is implemented on a per-jurisdiction basis and we have a commitment that is now in our law to implement the 15% rate that will of course have consequences for companies that are inside the framework and indeed for competitiveness as well. I will update the Dáil and answer questions from Members on this issue as it unfolds, but given the uncertainty about it that is the strongest message I can deliver at the moment.
Sentiment score: 0.39
Any engagement with the new US Administration has been constrained by the fact that it is only making appointments at the moment. That has been the key issue. The new Secretary of the Treasury had his appointment ratified a number of weeks ago. Many of the other officeholders within the US Treasury, however, with whom both we and Europe will deal, are in the very early days of coming into office. I expect there will be engagement between ourselves and the US in the weeks and months ahead. There will of course be engagement at an EU-US level, in which we will be involved. The Deputy asked whether there would be consequences for us if America were to take certain actions as a result of the implementation of this agreement. The answer to that question is "Yes." Overall, if America continues to see the merit - and I believe it will - in the value of strong exports on its economy in a stable tax environment in the world, I will make the case to it that it is also in its interest. In the early days of this process, making the case for the OECD and for a stable tax framework is an essential message for governments like ours to deliver.
Sentiment score: 0.41