Ireland’s fiscal watchdog has warned that two long-term savings funds designed to set aside volatile multinational tax revenues may end up being partly financed through government borrowing, raising concerns about the sustainability of public finances.
The Irish Fiscal Advisory Council (IFAC) said recent budget decisions suggest the government is increasingly using expected corporation tax windfalls to fund day-to-day spending rather than saving them as originally intended. The funds were established to preserve surplus revenues from multinational companies, which are considered unpredictable and heavily concentrated among a small number of firms.
However, IFAC said current plans indicate a significant departure from that approach. Instead of building reserves from excess tax receipts, the government is projected to borrow money to make contributions to the funds while simultaneously using most of the corporation tax income for current expenditure.
The council estimates that Ireland’s national debt could rise from around €220 billion to €250 billion by the end of the decade if borrowing is used to support the savings scheme. It warned that this would mean the state incurs additional interest costs, effectively reducing the benefit of setting aside funds in the first place.
According to IFAC chair Seamus Coffey, the core issue is that a large share of corporation tax revenue is being spent rather than saved. He noted that roughly five out of every six euro collected from this source is now absorbed into general government spending.
Ireland’s corporation tax receipts have become increasingly reliant on a small number of multinational companies, including pharmaceutical group Eli Lilly and technology firms Microsoft and Apple. Together, these companies account for around half of total corporation tax revenue, highlighting the vulnerability of the revenue stream.
The Fiscal Council also raised concerns about spending overruns, warning that expenditure in 2026 is already exceeding previously agreed limits. It said the government has increased its spending ceiling by €0.7 billion due to higher-than-expected costs in areas such as education and energy supports.
Between 2025 and 2030, public spending is projected to rise by about 7% annually, which IFAC said is significantly above the estimated sustainable growth rate of the economy, around 5%. It added that Ireland currently has the fastest net spending growth in the European Union.
The council cautioned that such trends risk amplifying economic cycles rather than smoothing them. It argued that fiscal policy should be designed to reduce volatility, particularly given Ireland’s reliance on unpredictable corporate tax inflows.
IFAC has called for tighter budgetary discipline and the introduction of formal fiscal rules to guide spending growth over the medium term. It said clearer constraints would help ensure that windfall revenues are saved during strong economic periods rather than absorbed into ongoing expenditure commitments.
The warning comes as policymakers continue to debate how best to manage Ireland’s rapidly growing but concentrated tax base while maintaining long-term fiscal stability.
