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Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Ireland Lays Out Plan to Create €100 Bln Sovereign Fund


Wed 11 Oct 2023 | 09:56 AM
Israa Farhan

In its 2024 budget announcement, Ireland revealed plans to create a sovereign fund worth €100 billion to aid in financing rising healthcare expenses and pensions linked to its aging demographic.

Finance Minister Michael McGrath stated before the parliament on Tuesday that this "Future Ireland Fund," funded primarily by corporate tax revenues, would ensure fiscal sustainability.

After two deficit years in 2020 and 2021 due to the COVID-19 pandemic, Dublin anticipates a budget surplus of €8.8 billion in 2023, following a surplus of €8.5 billion in the previous year.

Ireland, known for its favorable corporate tax system (with a 12.5% corporate tax rate) and highly skilled English-speaking workforce, serves as the European base for several multinational technology companies such as Apple, Google, and Meta, the parent company of Facebook, which boosts government revenues.

However, government members have cautioned in recent weeks against overreliance on corporate tax and called for prudent use of these revenues associated with the performance of these major corporations.

Under the Organization for Economic Cooperation and Development (OECD) agreement, Ireland has committed to impose a minimum tax of 15% on multinational corporations' profits, and the government is expected to introduce legislation to enact this next week.

McGrath specified that €4.3 billion annually, or 0.8% of Ireland's Gross Domestic Product (GDP), would be allocated to the fund.

He further explained that the fund could "grow to €100 billion by 2035" but would not be accessible until 2040.

An additional €14 billion, also stemming from windfall corporate tax revenues, will be directed toward an "Infrastructure, Climate, and Nature Fund" by 2030, dedicated to greenhouse gas reduction objectives.

During the presentation of the 2024 budget, the finance minister also proposed measures to address the country's housing shortage and tackle the cost-of-living crisis, which the left-wing opposition parties deemed insufficient.

Dublin plans to offer tax breaks for mortgage holders, increase certain allowances and childcare support, and raise the minimum wage by over 12% to €12.70 per hour.

These initiatives aim to provide relief to citizens facing economic challenges amid rising living costs.