While in Greece political forces are promising incentives that at best drain any emerging fiscal space and at worst result in huge deficits, in other countries they are using the surplus to solve the problems of the future.

It is estimated to receive 24 billion euros in corporate taxes this year, boosted by the profitability of the business, and expects these taxes to reach 27 billion euros in 2026. Ireland plans to place part of these proceeds in a sovereign wealth fund. The Irish Ministry of Finance is specifically planning to place 90 billion euros in the sovereign wealth fund to subsequently cover the needs caused by the crisis. aging population. Treasury Secretary Michael McGrath says it is “necessary” to introduce state fund of the typecalling out to the great fiscal surplus what the country has accumulated, but also Ireland’s high exposure to corporate tax volatility as well as “budget spending increases”.

He even points out that the growth in business profitability and the resulting dizzying tax revenues can be temporary, so this fund is “extremely needed.”

A decision will be made in the coming months on the amount to be deposited in said fund on an annual basis, but the Ministry of Finance has indicated that at least 34 billion euros will be disbursed annually until 2030. The ministry has calculated that if these sums are invested by 2035 and profits are collected, the total value of the sovereign wealth fund could be 142 billion euros.

Ireland has been generating impressive tax revenue for years, attracting large multinational companies to its land that have settled in Dublin to take advantage of the low corporate tax rate, the controversial 12.5%. However, in this case, the sovereign wealth fund debate is about business profitability, which has literally doubled from pre-pandemic levels.

The finance minister attributed the jump in tax revenues to the high profitability of the business, but believes the low corporate tax rate also played an important role. However, Treasury officials said they did not fully understand this sudden tax hike.