The difference between Ireland and Norway is not just that Norway saves more of its tax windfall, it knows when it will run out.
Geologists can estimate accurately when Norway’s oil and gas reserves will expire.
According to the Norwegian Offshore Directorate, oil and gas production will stay steady until 2030 after which point there will be a steep “tapering off” unless there are new finds.
In Ireland, we have no line of sight. We’re completely in the dark. The tax windfall could go on for another decade or could fall off a cliff tomorrow. Even the chief financial officers of Apple, Microsoft and Eli Lilly, the State’s three biggest taxpayers, don’t know.
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And yet we’re funnelling a huge amount of this windfall (€6 out of every €7) into everyday spending, into income tax breaks, into rent supports, stuff that won’t easily be resiled from.
We’re probably the only State in the world that bases its budgetary arithmetic on a handful of multinationals and the revenues they generate outside Ireland.
“The budgetary arithmetic is constructed on the crucial assumption that corporate profitability continues to expand; any decline in profitability could put a (potentially large) dent in corporate tax revenues,” the Department of Finance said in a report released with Budget 2027 on Tuesday.
If we had saved the windfall element of corporation tax since 2015 – approximately 50 per cent of annual receipts – the State would now have a war chest of €130 billion, capable of generating about €10 billion annually in interest (a typical stock market return).
This would be enough to do away with the Universal Social Charge (USC) in one fell swoop, without having to raise tax elsewhere.
So much of Ireland’s tax system is still on an emergency setting from the financial crash, USC being the most obvious example.
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The tax-free inheritance threshold of €420,000 and the 33 per cent capital acquisitions tax (CAT) that applies thereafter compares with a pre-crash threshold of €542,000 and CAT of 20 per cent.
Of course Ministers will point to the political straitjackets they find themselves in, the realpolitik of a modern democracy.
If Minister for Finance Simon Harris announced this week that he was planning to save €17 billion of the expected €34 billion in corporate tax this year in the midst of a cost-of-living crisis, he would, like Michael Collins, have been signing his own political death warrant and that of Fine Gael.
And therein lies the problem.
Big change requires a break from the sort of electoral budgeting, the winners and losers narrative, that we’ve had to date. A break from the firefighting, from the sticking plaster measures.
[ We’re apparently rolling in money, but everyone feels poorer and nobody is happyOpens in new window ]
We’ve had four years of energy credits and we still have the most expensive electricity prices in the European Union (EU). The credits are not a solution so much as a stop-gap. It’s the same with housing. The more money we spend on the housing assistance payment and other rent supports, the more there is a general erosion in affordability.
One senior figure said that Ireland acts like a poor country, spending money as it gets it, gambling on the back of future revenues, when it is actually a rich country that should be thinking more strategically about its wealth.
“Why don’t we feel the budget day numbers? One reason is that it’s going on hiring more staff across the public sector,” he said.
General government spending jumped by 54 per cent between 2019 and 2025, from €86.9 billion to €133.8 billion, facilitated by record corporate tax receipts.
At the same time, employment in the public sector rose by almost 80,000, from 339,000 to 417,000.
“If the Government thinks this (the additional employment) is warranted, it should be paying for it with money it can depend on,” the senior figure said.
[ Public spending hits record level as watchdog sharply criticises Budget 2027Opens in new window ]
The Government seems to have shelved any semblance of a plan to widen the tax base and seems content to play the game with the chips it gets from Corporate America.
Experts disagree on whether Ireland has what’s known in economics as “Dutch Disease” – where a sharp increase in wealth in one sector (usually from the discovery of oil or gas) bids up prices, creating cost challenges and a gradual loss of competitiveness.
The National Competitiveness and Productivity Council says Ireland is now “firmly part of the high-cost cluster in Europe”, with labour costs rising faster than the EU average since 2021. In the three years after the pandemic, labour costs rose faster than in the 13 years previous.
After playing a stellar role in financial crisis, Ireland now sits in an ivory tower at one remove from the financial zeitgeist: debt and fiscal constraint.
Tax receipts more than cover spending, resulting in healthy budget surpluses, while Government debt as a percentage of gross domestic product is now under 35 per cent. In the UK (in 2025) the equivalent was 101 per cent. In France, it was 115 per cent. In the US, 121 per cent.
There’s a good chance we’ll come to regret this period as a missed opportunity.
