The Parliamentary Budget Office (PBO) published its preliminary review of Budget 2023. The initial commentary expresses concern with the lack of data given on the cost of some of the tax changes resulting in an underestimation of the cost of the tax package announced in Budget 2023 by over €200 million according to the PBO.
The PBO report outlines that the Budget 2023 documentation states that “It is noticeable that the tax policy changes in the Budget documents do not all include an estimate of the cost of these changes. In some cases, data is not provided because: “the cost of this item is already incorporated in the base, and as such its further extension incurs no additional cost in terms of budgetary planning.”
The PBO notes the inconsistency of approach in the reporting of tax policy changes. It recommends that the Department of Finance provide information on the cost of tax changes and should not assume certain measures are “in the[tax] base” and continuing indefinitely.
The PBO also has concerns relating to the Department of Finance’s forecasting of tax revenue, with forecasts over 2022 to 2025 having been consistently revised upwards since Budget 2022. It suggests that recommendations included in the report by the Tax Forecasting Methodological Review Group be considered by the Department when preparing the Spring and Autumn updates.
Foreign owned multinational enterprises represented just 10 percent of corporation tax returns yet accounted for 97 percent of the corporation tax liability, while for income tax, the top 25 percent of earners contributed 80 percent of annual revenue. The employees of foreign-owned MNCs contribute one-third of income tax receipts annually. The need to safeguard the public finances and to promote revenue sustainability from the reliance of the Exchequer on relatively few taxpayers is also considered in the Preliminary PBO Review of Budget 2023.