GDP surge leads to €280m EU bill hike for Ireland

Taxpayers will have to swallow a €280m hike in contribution to the EU, due to a controversial 26% growth figure estimate published last week.

Finance Minister Michael Noonan confirmed that Ireland’s contribution to the EU budget will increase in the wake of the announcement of the “bizarre” growth figure by the Central Statistics Office (CSO).

Last night, Labour leader and former Public Expenditure Minister Brendan Howlin was scathing in his criticism of the CSO, which he described as being “a law onto itself”, saying the figures should not have been published without addressing the major anomalies which caused the spike.

The figures are distorted by tax inversion deals by pharmaceutical companies and aircraft purchase by leasing companies.

Tax inversion is the practice of moving a company’s legal home to a lower-tax juristiction while retaining its material operations in its country of origin

Speaking to the Irish Examiner yesterday, Mr Howlin said: “These bizarre figures should have been sorted out with Eurostat before their publication. They should have aggregated out the one-off factors which caused the major surge in the figures.”

Mr Howlin said Ireland should neither try to seek to benefit from the incorrect figures nor should it be liable as a result of them.

The revisions by the CSO also resulted in a significant increase in the country’s gross national income, which is used to calculate Ireland’s contribution to the EU budget.

Confirmation of the increased payment came on foot of a parliamentary question from Fianna Fáil’s finance spokesman Michael McGrath.

Mr Noonan replied that the revision meant an additional €380m would have to be paid to the EU budget.

However, he added that because of a number of mitigating factors, the increase would now be “in the order of €280m” when compared with the recent summer economic statement.

“It must be emphasised that the final impact depends on a number of variables, including the size of the overall EU budget for 2017, which is not due to be agreed until November 2016, movements in other EU member states, and other EU budget operational developments,” he said.

Mr McGrath said the Department of Finance must explain credibly why the distortion of the growth figures came about.

“Confirmation that the artificially inflated GDP figure for 2015 will cost Ireland an extra €280m in hard cash brings into sharp focus the need for the Department of Finance to give a credible explanation as to how Ireland’s growth rate could be distorted in such an unexpected and dramatic fashion,” he said. “Given the impact this extra liability will have on public services that people rely on, the Minister for Finance needs to urgently clarify whether this will have an impact on October’s budget.”

The Department of Finance said the increased Irish contribution to the EU will not impact on the fiscal space available to the Government, which is around €1bn for Budget 2017.

“This does not change as it is fixed each spring,” said a department spokesperson.


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