Economic Sustainability
#19Key Findings
In the category of economic sustainability, Ireland falls into the lower-middle ranks internationally (rank 19).
A cross-government circular economy unit has been created, but the issue has not taken a high policy priority. Underinvestment in critical infrastructure has stalled some important projects. Plans to decarbonize the economy rely on technologies deemed speculative. The country still strongly relies on fossil fuels.
The economy has functioned at near full employment for some time, but labor market participation rates are low in some groups. Labor market activation polices largely consist in pushing welfare claimants into jobs. The country lacks a national employment service, and most job seekers rely on private agencies.
Income taxes are progressive. The system relies heavily on corporation taxes, especially from a few large firms. Debt levels have fallen since the crisis, but remain comparatively high. Recent budgets have posted surpluses. Despite a recent increase in corporation taxes, the country faces international criticism for being a tax haven.
A cross-government circular economy unit has been created, but the issue has not taken a high policy priority. Underinvestment in critical infrastructure has stalled some important projects. Plans to decarbonize the economy rely on technologies deemed speculative. The country still strongly relies on fossil fuels.
The economy has functioned at near full employment for some time, but labor market participation rates are low in some groups. Labor market activation polices largely consist in pushing welfare claimants into jobs. The country lacks a national employment service, and most job seekers rely on private agencies.
Income taxes are progressive. The system relies heavily on corporation taxes, especially from a few large firms. Debt levels have fallen since the crisis, but remain comparatively high. Recent budgets have posted surpluses. Despite a recent increase in corporation taxes, the country faces international criticism for being a tax haven.
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How committed is the government to driving the transition toward a circular economy?
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The government is clearly committed to transitioning to a circular economy.
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The government is largely committed to transitioning to a circular economy.
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The government is somewhat committed to transitioning to a circular economy.
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1
The government is not at all committed to transitioning to a circular economy.
Ireland’s Circular Economy Programme for 2021 to 2027 (EPA 2021) is supported by the Circular Economy Act of July 2022, which incorporates the previous statutory National Waste Prevention Programme. The Act established a dedicated cross-government circular economy unit within the Department of the Environment, Climate and Communications to oversee its implementation. This unit collaborates with a Circular Economy Working Group that includes relevant departments, the EPA and local governments. Additional cross-government committees and working groups are also in place. The Bioeconomy Action Plan 2023-2025, released in October 2023, proposes both vertical and horizontal governance arrangements to ensure cross-government cooperation. It includes the formation of a high-level Bioeconomy Implementation and Development Group composed of senior public servants, a National Bioeconomy Forum, and an Expert Advisory Group.
Specific actions under the Circular Economy Programme include adopting food waste prevention programs, promoting eco-design, conducting awareness programs, providing funding supports, encouraging reuse and repair, and integrating waste prevention criteria into public and private procurement. The program focuses more on improving efficiency through measures rather than avoiding and shifting systems and structures. It follows an information deficit model of behavior change rather than aiming for systemic shifts that would transform the structural inertias embedding high consumption practices in institutions, markets and society. Consequently, the program aligns with the first wave of circularity programs reviewed by the EEA (2022). Indicators are not reported in the national strategy and policy and research do not appear to focus directly on reducing material consumption. Considerable evolution will be required to align with the state of the art in sustainable consumption and production, if the policy is to deliver absolute reductions in an equitable manner.
Citations:
Environmental Protection Agency. 2021. “The Circular Economy Programme 2021-2027.” https://www.epa.ie/publications/circular-economy/resources/the-circular-economy-programme-2021-2027.php
Government of Ireland. 2023. “Bioeconomy Action Plan 2023-2025.” https://www.gov.ie/en/publication/a1bb6-bioeconomy-policy/#
EEA. 2022. “Circular Economy Policy Innovation and Good Practice in Member States.” https://ec.europa.eu/docsroom/documents/2631/attachments/1/translations/en/renditions/pdf
Specific actions under the Circular Economy Programme include adopting food waste prevention programs, promoting eco-design, conducting awareness programs, providing funding supports, encouraging reuse and repair, and integrating waste prevention criteria into public and private procurement. The program focuses more on improving efficiency through measures rather than avoiding and shifting systems and structures. It follows an information deficit model of behavior change rather than aiming for systemic shifts that would transform the structural inertias embedding high consumption practices in institutions, markets and society. Consequently, the program aligns with the first wave of circularity programs reviewed by the EEA (2022). Indicators are not reported in the national strategy and policy and research do not appear to focus directly on reducing material consumption. Considerable evolution will be required to align with the state of the art in sustainable consumption and production, if the policy is to deliver absolute reductions in an equitable manner.
Citations:
Environmental Protection Agency. 2021. “The Circular Economy Programme 2021-2027.” https://www.epa.ie/publications/circular-economy/resources/the-circular-economy-programme-2021-2027.php
Government of Ireland. 2023. “Bioeconomy Action Plan 2023-2025.” https://www.gov.ie/en/publication/a1bb6-bioeconomy-policy/#
EEA. 2022. “Circular Economy Policy Innovation and Good Practice in Member States.” https://ec.europa.eu/docsroom/documents/2631/attachments/1/translations/en/renditions/pdf
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How committed is the government to updating and protecting critical infrastructure?
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The government is clearly committed to updating basic technical infrastructure.
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The government is largely committed to updating basic technical infrastructure.
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3
The government is somewhat committed to updating basic technical infrastructure.
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1
The government is not at all committed to updating basic technical infrastructure.
Ireland faces capacity challenges in providing infrastructure and services such as housing, healthcare, childcare, transport, energy infrastructure and climate adaptation (NESC 2023; ESRI 2024). Since 2013, the National Risk Assessment has outlined system-wide challenges facing the state, including a critical lack of investment in viable and resilient critical infrastructures. Social partners and think tanks advocate for budget surpluses to be invested in capital projects. Various plans have been stalled due to the lack of critical infrastructure. For instance, planning applications for urgently needed housing cannot proceed in some areas due to the absence of essential infrastructure like water and sewage treatment plants. In other areas, energy supply (electricity) poses a threat to both residential and industrial use patterns.
Fostering national resilience is identified as an important objective in the Strategic Emergency Management: National Structures and Framework (SEM), which focuses on the quick recovery of essential services from emergency events.
The European Council (EC) Directive 2008/114/EC3 requires Member States to identify and designate European Critical Infrastructure (ECI) and assess the need for its protection. This strategy is broken down into sector-specific and sub-sector plans focused on energy, food and water, ICT, finance and financial services, transport, health, public administration, national security, policing, public safety infrastructure and industry. Examples include electric power stations and policing infrastructure. Ireland’s Climate Change Assessment indicates that a sectoral focus on adaptation, without integrative assessment opportunities, increases the risk of underestimating cascading risks – how risks can transfer or flow from one sector to another (Murphy et al. 2023). Approaches to risk screening have been developed to examine vulnerabilities across four critical infrastructure sectors: transport, energy, water and communications. While risk screening is useful for high-level assessment and identifying assets and locations for further analysis, it must be complemented with standardized quantitative approaches for stress testing critical infrastructure, identifying potential failure points, adaptation options and cascading risks.
Citations:
ESRI. 2024. “The National Development Plan in 2023: Priorities and Capacity.” ESRI Survey and Statistical Report Series. https://www.esri.ie/news/irelands-national-development-plan-navigating-substantial-investment-needs-in-housing-health
Murphy et al. 2023. Ireland’s Climate Change Assessment Volume 3: Being Prepared for.
Ireland’s Future Climate https://www.epa.ie/publications/monitoring–assessment/climate-change/ICCA_Volume-3.pdf
Fostering national resilience is identified as an important objective in the Strategic Emergency Management: National Structures and Framework (SEM), which focuses on the quick recovery of essential services from emergency events.
The European Council (EC) Directive 2008/114/EC3 requires Member States to identify and designate European Critical Infrastructure (ECI) and assess the need for its protection. This strategy is broken down into sector-specific and sub-sector plans focused on energy, food and water, ICT, finance and financial services, transport, health, public administration, national security, policing, public safety infrastructure and industry. Examples include electric power stations and policing infrastructure. Ireland’s Climate Change Assessment indicates that a sectoral focus on adaptation, without integrative assessment opportunities, increases the risk of underestimating cascading risks – how risks can transfer or flow from one sector to another (Murphy et al. 2023). Approaches to risk screening have been developed to examine vulnerabilities across four critical infrastructure sectors: transport, energy, water and communications. While risk screening is useful for high-level assessment and identifying assets and locations for further analysis, it must be complemented with standardized quantitative approaches for stress testing critical infrastructure, identifying potential failure points, adaptation options and cascading risks.
Citations:
ESRI. 2024. “The National Development Plan in 2023: Priorities and Capacity.” ESRI Survey and Statistical Report Series. https://www.esri.ie/news/irelands-national-development-plan-navigating-substantial-investment-needs-in-housing-health
Murphy et al. 2023. Ireland’s Climate Change Assessment Volume 3: Being Prepared for.
Ireland’s Future Climate https://www.epa.ie/publications/monitoring–assessment/climate-change/ICCA_Volume-3.pdf
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How committed is the government to fully decarbonizing the energy system by 2050?
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The government is clearly committed to transitioning to a decarbonized energy system.
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The government is largely committed to transitioning to a decarbonized energy system.
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The government is somewhat committed to transitioning to a decarbonized energy system.
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1
The government is not at all committed to transitioning to a decarbonized energy system.
To meet the required level of emissions reduction by 2030, the Irish government has committed to increasing the share of electricity generated from renewable sources to up to 80%. This plan emphasizes facilitating local community-based projects, delivering three new transmission grid connections to Northern Ireland, Great Britain, and the European Union, phasing out coal and peat-fired electricity generation, and ensuring that 20–30% of system demand is flexible by 2030 (CAP 2021).
Achieving a 100% renewable energy system necessitates the rollout of renewable energy infrastructure, political will to plan and invest in new grid infrastructure, including a north-south interconnector, and the implementation of Eirgrid’s DS3 program. Energy system decarbonization is governed chiefly by the national legislative Climate Action and Low Carbon Development (Amendment) Act 2021 and the EU effort-sharing regulation. Policy is guided by the Climate Action Plans and the EU requirement for National Energy and Climate Plans and an associated long-term strategy.
Ireland does not yet have a strategy or an implementation roadmap that effectively meets its national obligations to fully decarbonize the energy system by 2050 without relying on speculative technologies (Torney and O’Mahony 2023). National energy modeling has not identified technically feasible scenarios in which Ireland can remain within its population-weighted share of the remaining global carbon budget for 1.5°C (McGookin et al. 2023). Ireland’s strong dependence on fossil fuels necessitates systemic transitions and transformations that have not yet been sufficiently articulated in national policy or in the analysis used to frame policy development. Addressing these gaps will require transformative measures, such as shifting development paths and demand management (O’Mahony and Torney 2023).
While policies and measures to meet decarbonization goals by 2050 are inadequate, progress has been made in policy implementation architecture. The Department of Environment and Climate Change, under a Green Party Minister since 2020, has built upon progress in Climate Action Planning and oversees an annual process of policy renewal for the 2030 horizon. This process includes other ministries and agency stakeholders in a whole-of-government approach. Sector-specific actions are articulated toward meeting sectoral budgets, with quarterly implementation monitoring by a dedicated unit in the Prime Minister’s Office (Department of the Taoiseach).
Notable progress includes legislating to divest public funds from fossil fuel companies, halting new fossil fuel exploration, and banning hydraulic fracking for gas. Additionally, Bord na Móna, the semi-state company responsible for developing and exploiting peatlands, has transitioned from peat extraction to peatland rehabilitation and renewable energy. After more than 70 years of operation, carbon-intensive peat-fired electricity ended in Ireland in December 2023, with a switch to biomass at the final plant remaining open, at Edenderry in County Offaly. However, failure to deliver the necessary renewable generation capacity, demand reduction, or electricity storage has undermined previous commitments to close the Moneypoint coal-fired generation plant in 2025. It is expected that Ireland will exceed the sectoral target for electricity in both the first and the second carbon budget periods up to 2030 (CCAC 2023).
Under the 2021 Climate Act, relevant ministers are required to be accountable to both houses of the Oireachtas, as well as to the relevant Oireachtas committee. The political and legal consequences for ministers if or when targets are missed remain to be seen.
Citations:
CCAC (Climate Change Advisory Council). 2023. Annual Review 2023. https://www.climatecouncil.ie/councilpublications/annualreviewandreport/CCAC-AR-2023-postfinal.pdf
McGookin, et al. 2023. Ireland’s Climate Change Assessment 2023: Volume 2: Achieving Climate.
Neutrality by 2050 https://www.epa.ie/publications/monitoring–assessment/climate-change/ICCA_Volume-2.pdf
O’Mahony, Mary, and Diarmuid Torney. 2023. “Transforming Development: Economy, Innovation and Finance.” Irish Climate Change Assessment 4 (6). https://www.epa.ie/publications/monitoring–assessment/climate-change/ICCA_Volume-4.pdf
Torney, D., and O’Mahony, T. 2023. “Transforming Governance and Policy.” Chapter 7 Volume 4 of Irish Climate Change Assessment. https://www.epa.ie/publications/monitoring–assessment/climate-change/ICCA_Volume-4.pdf
Achieving a 100% renewable energy system necessitates the rollout of renewable energy infrastructure, political will to plan and invest in new grid infrastructure, including a north-south interconnector, and the implementation of Eirgrid’s DS3 program. Energy system decarbonization is governed chiefly by the national legislative Climate Action and Low Carbon Development (Amendment) Act 2021 and the EU effort-sharing regulation. Policy is guided by the Climate Action Plans and the EU requirement for National Energy and Climate Plans and an associated long-term strategy.
Ireland does not yet have a strategy or an implementation roadmap that effectively meets its national obligations to fully decarbonize the energy system by 2050 without relying on speculative technologies (Torney and O’Mahony 2023). National energy modeling has not identified technically feasible scenarios in which Ireland can remain within its population-weighted share of the remaining global carbon budget for 1.5°C (McGookin et al. 2023). Ireland’s strong dependence on fossil fuels necessitates systemic transitions and transformations that have not yet been sufficiently articulated in national policy or in the analysis used to frame policy development. Addressing these gaps will require transformative measures, such as shifting development paths and demand management (O’Mahony and Torney 2023).
While policies and measures to meet decarbonization goals by 2050 are inadequate, progress has been made in policy implementation architecture. The Department of Environment and Climate Change, under a Green Party Minister since 2020, has built upon progress in Climate Action Planning and oversees an annual process of policy renewal for the 2030 horizon. This process includes other ministries and agency stakeholders in a whole-of-government approach. Sector-specific actions are articulated toward meeting sectoral budgets, with quarterly implementation monitoring by a dedicated unit in the Prime Minister’s Office (Department of the Taoiseach).
Notable progress includes legislating to divest public funds from fossil fuel companies, halting new fossil fuel exploration, and banning hydraulic fracking for gas. Additionally, Bord na Móna, the semi-state company responsible for developing and exploiting peatlands, has transitioned from peat extraction to peatland rehabilitation and renewable energy. After more than 70 years of operation, carbon-intensive peat-fired electricity ended in Ireland in December 2023, with a switch to biomass at the final plant remaining open, at Edenderry in County Offaly. However, failure to deliver the necessary renewable generation capacity, demand reduction, or electricity storage has undermined previous commitments to close the Moneypoint coal-fired generation plant in 2025. It is expected that Ireland will exceed the sectoral target for electricity in both the first and the second carbon budget periods up to 2030 (CCAC 2023).
Under the 2021 Climate Act, relevant ministers are required to be accountable to both houses of the Oireachtas, as well as to the relevant Oireachtas committee. The political and legal consequences for ministers if or when targets are missed remain to be seen.
Citations:
CCAC (Climate Change Advisory Council). 2023. Annual Review 2023. https://www.climatecouncil.ie/councilpublications/annualreviewandreport/CCAC-AR-2023-postfinal.pdf
McGookin, et al. 2023. Ireland’s Climate Change Assessment 2023: Volume 2: Achieving Climate.
Neutrality by 2050 https://www.epa.ie/publications/monitoring–assessment/climate-change/ICCA_Volume-2.pdf
O’Mahony, Mary, and Diarmuid Torney. 2023. “Transforming Development: Economy, Innovation and Finance.” Irish Climate Change Assessment 4 (6). https://www.epa.ie/publications/monitoring–assessment/climate-change/ICCA_Volume-4.pdf
Torney, D., and O’Mahony, T. 2023. “Transforming Governance and Policy.” Chapter 7 Volume 4 of Irish Climate Change Assessment. https://www.epa.ie/publications/monitoring–assessment/climate-change/ICCA_Volume-4.pdf
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To what extent do existing labor market institutions support or hinder the transition to an adaptive labor market?
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Labor market institutions are fully aligned with the goal of an adaptable labor market.
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Labor market institutions are largely aligned with the goal of an adaptable labor market.
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Labor market institutions are only somewhat aligned with the goal of an adaptable labor market.
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1
Labor market institutions are not at all aligned with the goal of an adaptable labor market.
Policies and regulations in Ireland could better encourage and empower individuals to develop their skills throughout their working lives in response to changing labor market demands. Current policies weakly incentivize employer engagement and full employment limits uptake on some skills shortage initiatives. The National Skills Strategy (2025) established the National Skills Council and nine Regional Skills Fora, along with related governance arrangements. National responses are managed through SOLAS, the national training agency, and programs like Springboard, which offers third-level upskilling opportunities focused on skills shortages in sectors such as data and IT. However, the OECD (2023) has identified governance arrangements as complex and highlighted concerns about gaps in lifelong learning and skills imbalances across different sectors. While policies and regulations have helped firms absorb short-term economic shocks through short-time work schemes and employment or wage subsidies, as demonstrated during the pandemic, more is needed for a just transition. Ireland lacks a national employment service, and the targeted public employment service primarily focuses on social welfare recipients. Most workers and job seekers rely on private employment agencies, often sector-specific, to enhance their mobility across firms, industries, regions and countries. Additionally, there is little adult career guidance beyond educational guidance.
Recent research commissioned by Skillnet Ireland (Siedschlag et al. 2022) found that developing new skills within the enterprise workforce is a top policy challenge for climate action. The research also noted that the demand for digital skills in Ireland’s enterprise sector is not being sufficiently met. It proposed that tailored training programs are necessary for each sector and enterprise group.
Citations:
OECD. 2023. OECD Skills Strategy Ireland: Assessment and Recommendations. Paris: OECD Publishing. https://doi.org/10.1787/d7b8b40b-en
Siedschlag, I., W. Yan, and S. Meneto. 2022. “Talent for Ireland’s Green Economy: Examining Skill Needs to Support Enterprise Innovation and Ireland’s Transition to a Low-Carbon Economy.” https://www.esri.ie/publications/talent-for-irelands-green-economy-examining-skill-needs-to-support-enterprise
Recent research commissioned by Skillnet Ireland (Siedschlag et al. 2022) found that developing new skills within the enterprise workforce is a top policy challenge for climate action. The research also noted that the demand for digital skills in Ireland’s enterprise sector is not being sufficiently met. It proposed that tailored training programs are necessary for each sector and enterprise group.
Citations:
OECD. 2023. OECD Skills Strategy Ireland: Assessment and Recommendations. Paris: OECD Publishing. https://doi.org/10.1787/d7b8b40b-en
Siedschlag, I., W. Yan, and S. Meneto. 2022. “Talent for Ireland’s Green Economy: Examining Skill Needs to Support Enterprise Innovation and Ireland’s Transition to a Low-Carbon Economy.” https://www.esri.ie/publications/talent-for-irelands-green-economy-examining-skill-needs-to-support-enterprise
To what extent do existing labor market institutions support or hinder the transition to an inclusive labor market?
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Labor market institutions are fully aligned with the goal of an inclusive labor market.
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Labor market institutions are largely aligned with the goal of an inclusive labor market.
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Labor market institutions are only somewhat aligned with the goal of an inclusive labor market.
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1
Labor market institutions are not at all aligned with the goal of an inclusive labor market.
The NESC (2023) highlights a cohesion challenge between the economy and society in Ireland, where some individuals face unemployment, poverty, weak labor-market attachment, low pay and job precarity, remaining only weakly connected to the enterprise economy. Ireland’s approach to ‘labor market activation’ pressures welfare claimants into sometimes low-paid employment. Despite near full employment, overall labor market participation is low, particularly among people with disabilities, migrants, ethnic minorities and women with children. The labor market is unequal and segregated, highly gendered and racialized, with significant intersectional inequalities affecting women of color, disabled women, migrant women, indigenous Traveller women and other ethnic minority women. Spatial and socioeconomic discrimination, coupled with class, increases the likelihood of experiencing poverty and inequality, even for those in employment. There is a commitment to raising the statutory minimum wage to a living wage, and family working payments are available, yet in-work poverty persists. The INOU (2023) notes young people’s vulnerability to low pay. Light-touch employment regulations combined with the lowest market wages in the OECD result in up to one-third of the workforce being low-paid, with many also facing precarious working conditions.
Policies and regulations in place include comprehensive out-of-work benefits and active labor market programs designed to safeguard workers and improve job prospects. The Commission on Tax and Welfare does not find considerable discouragement of employment; replacement rates are average and not problematic for single entrants. While measures can enhance incentives, issues often pertain more to specific groups (e.g., adults with large families, lone parents unable to access childcare, Travellers facing discrimination) rather than tax-benefit reforms and targeted in-work benefits. There have been policy changes in Apprentice and Trainee programs, and the youth work experience program (internship) YESS targets NEETs. A range of work-life balance programs exist, and remote work is popular but unevenly facilitated and somewhat controversial with employees.
The livelihoods assessment in Ireland’s Climate Change Assessment has noted a weak national understanding of livelihood opportunities, emphasizing the need for a long-term vision and strategic long-term policy (O’Mahony and Torney 2023). The assessment identified various knowledge and policy gaps affecting inclusiveness, including opportunities and capabilities, resilience, decent work, identity, income, equity, just transition and carer roles. It also stressed the need for enabling measures such as education, training, social protection and frontier innovations like universal basic services (UBS), universal basic income (UBI) and a shorter working week, as highlighted by Murphy (2023).
Citations:
NESC. 2023. Is Ireland Thriving? Answers from International Assessments. Report number 32.
INOU. 2023. INOU Submission to Low Pay Commission: Subminimum Youth Rates of National Minimum Wage. Dublin: INOU. https://www.inou.ie/assets/files/pdf/inou_lpc_submission_july_2023.pdf
O’Mahony, T., and D. Torney. 2023. “Transforming Livelihoods.” Ireland’s Climate Change Assessment 4 (6).
Murphy, M. P. 2023. Creating an Ecosocial Welfare Future: Making It Happen. Bristol: Policy Press.
Policies and regulations in place include comprehensive out-of-work benefits and active labor market programs designed to safeguard workers and improve job prospects. The Commission on Tax and Welfare does not find considerable discouragement of employment; replacement rates are average and not problematic for single entrants. While measures can enhance incentives, issues often pertain more to specific groups (e.g., adults with large families, lone parents unable to access childcare, Travellers facing discrimination) rather than tax-benefit reforms and targeted in-work benefits. There have been policy changes in Apprentice and Trainee programs, and the youth work experience program (internship) YESS targets NEETs. A range of work-life balance programs exist, and remote work is popular but unevenly facilitated and somewhat controversial with employees.
The livelihoods assessment in Ireland’s Climate Change Assessment has noted a weak national understanding of livelihood opportunities, emphasizing the need for a long-term vision and strategic long-term policy (O’Mahony and Torney 2023). The assessment identified various knowledge and policy gaps affecting inclusiveness, including opportunities and capabilities, resilience, decent work, identity, income, equity, just transition and carer roles. It also stressed the need for enabling measures such as education, training, social protection and frontier innovations like universal basic services (UBS), universal basic income (UBI) and a shorter working week, as highlighted by Murphy (2023).
Citations:
NESC. 2023. Is Ireland Thriving? Answers from International Assessments. Report number 32.
INOU. 2023. INOU Submission to Low Pay Commission: Subminimum Youth Rates of National Minimum Wage. Dublin: INOU. https://www.inou.ie/assets/files/pdf/inou_lpc_submission_july_2023.pdf
O’Mahony, T., and D. Torney. 2023. “Transforming Livelihoods.” Ireland’s Climate Change Assessment 4 (6).
Murphy, M. P. 2023. Creating an Ecosocial Welfare Future: Making It Happen. Bristol: Policy Press.
To what extent do existing labor market institutions support or hinder the mitigation of labor market risks?
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Labor market institutions are fully aligned with the goal of protecting individuals against labor market risks.
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Labor market institutions are largely aligned with the goal of protecting individuals against labor market risks.
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Labor market institutions are only somewhat aligned with the goal of protecting individuals against labor market risks.
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Labor market institutions are not at all aligned with the goal of protecting individuals against labor market risks.
“Pathways to Work (2020-2025)” identifies labor market risks associated with the modern economy, characterized by rapidly transitioning skills, sectors and job types due to digitalization, artificial intelligence and climate transition. The Labour Market Council is hosted by the Department of Social Protection, and there is also a Low Pay Commission. Additionally, the Department of Enterprise and Employment anticipates labor market changes, while the Department of Higher and Further Education, Research, Innovation and Skills oversees SOLAS, the national training agency. However, there is a lack of integration across these bodies. The 2020 Programme for Government includes a commitment to a Just Transition Commissioner. While a limited Just Transition Commission was rolled out in the context of the transition from peat/turf production in the midlands, there is a growing sense that a broader Just Transition Commissioner is necessary. This expanded role would address labor market risks and transitions resulting from climate and emissions policies, including those related to agriculture, which is considered Ireland’s primary transition risk.
Citations:
McGann, M., and M. P. Murphy. 2021. “Introduction: The Dual Tracks of Welfare and Activation Reform-Governance and Conditionality.” Administration 69 (2): 1-16.
OECD. 2024. “Benefits in Unemployment, Share of Previous Income (Indicator).” doi:10.1787/0cc0d0e5-en
Citations:
McGann, M., and M. P. Murphy. 2021. “Introduction: The Dual Tracks of Welfare and Activation Reform-Governance and Conditionality.” Administration 69 (2): 1-16.
OECD. 2024. “Benefits in Unemployment, Share of Previous Income (Indicator).” doi:10.1787/0cc0d0e5-en
Graph View
To what extent do existing tax institutions and procedures support or hinder adequate tax revenue flows?
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The tax system is fully aligned with the goals of ensuring adequate tax revenues.
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The tax system is largely aligned with the goals of ensuring adequate tax revenues.
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The tax system is only somewhat aligned with the goals of ensuring adequate tax revenues.
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The tax system is not at all aligned with the goals of ensuring adequate tax revenues.
The Irish tax system is relatively effective in addressing disincentives for seeking employment. However, there are specific issues such as high marginal tax rates for second earners due to a male breadwinner family-based system, and steep cliffs in low-paid interactions with welfare and tax systems, which policy attempts to taper. From the perspective of companies making investments, the tax system is considered effective, with some viewing it as overly generous due to historical and ongoing tax breaks for R&D investments. Ireland is also known for its favorable tax treatment of cultural work, exempting the first €50,000 of income for artistic work. According to the OECD, Ireland has one of the lowest disincentives to work as a percentage of earnings lost to taxes and benefits lost in return to work (OECD, 2024).
The administrative capacity for tax collection in Ireland is robust, with the Revenue Commissioners considered a best practice administrator. There is pressure to extend its administrative capacities beyond revenue collection. While there is a relatively robust and public prosecution of tax evasion, the issue lies in the degree to which tax avoidance is legal and does not require prosecution.
Ireland’s over-reliance on corporation tax creates sustainability issues for tax and spend policies. Historically low corporate tax rates have incentivized corporations to route international revenues through Ireland, creating an international tax justice issue. Increased flows of multinational corporation (MNC) revenue through Ireland have boosted recent corporation tax volumes, complicating the sustainability of Irish tax revenue. This dependency is highlighted by the Irish Fiscal Advisory Council (IFAC) and the Economic and Social Research Institute (ESRI), noting the vulnerability of Ireland’s revenue to shifts in MNC activity or changes in global corporate tax policies, particularly those of the United States. The “rainy day” fund, disbanded during the pandemic, was reestablished in Budget 2024 as the Ireland Strategic Investment Fund, but contributions to it were critiqued as insufficient by both ESRI (2023) and IFAC (2023).
The distortion of Irish GDP, largely due to the transfer pricing activities of MNCs, presents a risk to tax sustainability and affects the accuracy of performance indicators. Paul Krugman famously referred to this phenomenon as “leprechaun economics.” For international comparisons, Ireland’s GNP is often used instead of the inflated GDP. General figures for investment as a percentage of GNP tend to be underestimated, while growth figures are overestimated. In 2017, the Irish Central Statistics Office responded by developing the modified Gross National Income indicator (GNI*), to provide a more accurate picture. In 2021, Ireland’s public spending was 24.4% of GDP, significantly below the EU-27 average When measured by the more realistic modified Gross National Income, the ratiowas 39.3% of GNI* , which is still below the EU-27 average for public spending. .
Citations:
IFAC. 2023. “Fiscal Assessment Report, December 2023 – Irish Fiscal Advisory Council.” https://www.fiscalcouncil.ie/wp-content/uploads/2023/12/Fiscal-Assessment-Report-December-2023-Irish-Fiscal-Advisory-Council-Dublin.pdf
ESRI. 2023. “Budget Perspectives 2024.” https://www.esri.ie/events/budget-perspectives-2024
OECD. 2024. “Financial Disincentive to Return to Work (Indicator).” doi: 10.1787/3ef6e9d7-en (Accessed on 19 February 2024).
The administrative capacity for tax collection in Ireland is robust, with the Revenue Commissioners considered a best practice administrator. There is pressure to extend its administrative capacities beyond revenue collection. While there is a relatively robust and public prosecution of tax evasion, the issue lies in the degree to which tax avoidance is legal and does not require prosecution.
Ireland’s over-reliance on corporation tax creates sustainability issues for tax and spend policies. Historically low corporate tax rates have incentivized corporations to route international revenues through Ireland, creating an international tax justice issue. Increased flows of multinational corporation (MNC) revenue through Ireland have boosted recent corporation tax volumes, complicating the sustainability of Irish tax revenue. This dependency is highlighted by the Irish Fiscal Advisory Council (IFAC) and the Economic and Social Research Institute (ESRI), noting the vulnerability of Ireland’s revenue to shifts in MNC activity or changes in global corporate tax policies, particularly those of the United States. The “rainy day” fund, disbanded during the pandemic, was reestablished in Budget 2024 as the Ireland Strategic Investment Fund, but contributions to it were critiqued as insufficient by both ESRI (2023) and IFAC (2023).
The distortion of Irish GDP, largely due to the transfer pricing activities of MNCs, presents a risk to tax sustainability and affects the accuracy of performance indicators. Paul Krugman famously referred to this phenomenon as “leprechaun economics.” For international comparisons, Ireland’s GNP is often used instead of the inflated GDP. General figures for investment as a percentage of GNP tend to be underestimated, while growth figures are overestimated. In 2017, the Irish Central Statistics Office responded by developing the modified Gross National Income indicator (GNI*), to provide a more accurate picture. In 2021, Ireland’s public spending was 24.4% of GDP, significantly below the EU-27 average When measured by the more realistic modified Gross National Income, the ratiowas 39.3% of GNI* , which is still below the EU-27 average for public spending. .
Citations:
IFAC. 2023. “Fiscal Assessment Report, December 2023 – Irish Fiscal Advisory Council.” https://www.fiscalcouncil.ie/wp-content/uploads/2023/12/Fiscal-Assessment-Report-December-2023-Irish-Fiscal-Advisory-Council-Dublin.pdf
ESRI. 2023. “Budget Perspectives 2024.” https://www.esri.ie/events/budget-perspectives-2024
OECD. 2024. “Financial Disincentive to Return to Work (Indicator).” doi: 10.1787/3ef6e9d7-en (Accessed on 19 February 2024).
To what extent do existing tax institutions and procedures consider equity aspects?
10
9
9
The tax system is fully aligned with the goal of ensuring equity.
8
7
6
7
6
The tax system is largely aligned with the goal of ensuring equity.
5
4
3
4
3
The tax system is only somewhat aligned with the goal of ensuring equity.
2
1
1
The tax system is not at all aligned with the goal of ensuring equity.
Irish tax policies largely ensure horizontal equity by treating different groups of economic actors with similar tax-paying abilities consistently. However, two areas require attention: the tax treatment of second earners, who face high marginal tax rates, and the tax treatment of landlords, whose income is subject to income tax rather than corporate tax. The income tax system is relatively progressive, imposing higher taxes on those with a greater ability to pay, thus ensuring vertical equity. However, the indirect tax system is less progressive than the income and property tax systems, disproportionately impacting the lowest income deciles due to Value Added Tax and heavy excise taxes on alcohol and tobacco products, which have been increased in recent budgets.
Income tax, considered progressive, has become slightly less so due to targeted tax reductions for middle to higher earners, increasing the standard bands and cutting the higher rate (SJI 2023, TASC 2023). The 2022 Commission on Tax and Welfare examined potential disincentives within the tax system that may discourage individuals from seeking employment and companies from making investments. It set out medium to long-term policy scenarios to advise the government, effectively seeking to raise revenue while protecting incentives.
The effective tax rate for businesses is low at 14% and has decreased in recent years, while the average rate of income tax and social security contributions for employees is relatively low at 27.5%, up from 20.35% in 2007, suggesting an inequitable balance. Despite considerable inequality in market income in Ireland compared to OECD nations, taxation and the transfer system help narrow the gap, making post-tax income more equitable (McGauran, 2021). However, measures of income poverty and material deprivation in Ireland still point to a high incidence of low living standards (Roantree et al., 2021).
Equity also requires a global assessment of labor and capital impacts. The “double Irish” corporation tax facility was replaced in 2016 with a “knowledge box” providing a 6.25% corporate tax rate on profits from certain patents and copyrighted software resulting from qualifying R&D conducted in Ireland. With 25% of the Irish business labor force directly employed by MNCs, income tax is less affected. At the fiscal level, over 75% of corporate tax receipts and 40% of income tax and Universal Social Charge payments come from MNCs. Corporation tax receipts were €15.3 billion in 2021, €3.5 billion (almost 30%) higher than 2020, reflecting strong exports (DOF 2022). This growth continued into 2022 and 2023, with a slight drop in late 2023 before a recovery. Receipts are heavily concentrated, with around 10 large firms (including Apple, Dell, Google, Intel, Microsoft, and Oracle) accounting for 56% of all corporation tax generated in 2020, with pharma and IT sectors dominating.
Citations:
TASC. 2023. “TASC Publications.” https://www.tasc.ie/publications
SJI. 2023. “Budget 2024 Analysis and Critique.” https://www.socialjustice.ie/content/publications/budget-2024-analysis-and-critique
McGauran, A. M. 2021. “Welfare and Employment in Ireland: Income, Wealth, Redistribution and Their Implications for the Welfare System.” https://www.nesc.ie/publications/welfare-and-employment-in-ireland-income-wealth-redistribution-and-theirimplications-for-the-welfare-system-151-7/
Roantree, B., Karina Doorley, Seamus McGuinness, Bertrand Maître, Sylvia C. Murphy, and Emma Quinn. 2021. Poverty, Income Inequality and Living Standards in Ireland. Dublin: Economic and Social Research Institute and Community Foundation for Ireland. https://www.esri.ie/publications/poverty-income-inequality-and-living-standards-inireland-first-annual-report
Income tax, considered progressive, has become slightly less so due to targeted tax reductions for middle to higher earners, increasing the standard bands and cutting the higher rate (SJI 2023, TASC 2023). The 2022 Commission on Tax and Welfare examined potential disincentives within the tax system that may discourage individuals from seeking employment and companies from making investments. It set out medium to long-term policy scenarios to advise the government, effectively seeking to raise revenue while protecting incentives.
The effective tax rate for businesses is low at 14% and has decreased in recent years, while the average rate of income tax and social security contributions for employees is relatively low at 27.5%, up from 20.35% in 2007, suggesting an inequitable balance. Despite considerable inequality in market income in Ireland compared to OECD nations, taxation and the transfer system help narrow the gap, making post-tax income more equitable (McGauran, 2021). However, measures of income poverty and material deprivation in Ireland still point to a high incidence of low living standards (Roantree et al., 2021).
Equity also requires a global assessment of labor and capital impacts. The “double Irish” corporation tax facility was replaced in 2016 with a “knowledge box” providing a 6.25% corporate tax rate on profits from certain patents and copyrighted software resulting from qualifying R&D conducted in Ireland. With 25% of the Irish business labor force directly employed by MNCs, income tax is less affected. At the fiscal level, over 75% of corporate tax receipts and 40% of income tax and Universal Social Charge payments come from MNCs. Corporation tax receipts were €15.3 billion in 2021, €3.5 billion (almost 30%) higher than 2020, reflecting strong exports (DOF 2022). This growth continued into 2022 and 2023, with a slight drop in late 2023 before a recovery. Receipts are heavily concentrated, with around 10 large firms (including Apple, Dell, Google, Intel, Microsoft, and Oracle) accounting for 56% of all corporation tax generated in 2020, with pharma and IT sectors dominating.
Citations:
TASC. 2023. “TASC Publications.” https://www.tasc.ie/publications
SJI. 2023. “Budget 2024 Analysis and Critique.” https://www.socialjustice.ie/content/publications/budget-2024-analysis-and-critique
McGauran, A. M. 2021. “Welfare and Employment in Ireland: Income, Wealth, Redistribution and Their Implications for the Welfare System.” https://www.nesc.ie/publications/welfare-and-employment-in-ireland-income-wealth-redistribution-and-theirimplications-for-the-welfare-system-151-7/
Roantree, B., Karina Doorley, Seamus McGuinness, Bertrand Maître, Sylvia C. Murphy, and Emma Quinn. 2021. Poverty, Income Inequality and Living Standards in Ireland. Dublin: Economic and Social Research Institute and Community Foundation for Ireland. https://www.esri.ie/publications/poverty-income-inequality-and-living-standards-inireland-first-annual-report
To what extent do existing tax institutions and procedures minimize compliance and collection costs?
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9
9
The tax system is fully aligned with the goal of minimizing compliance and collection costs.
8
7
6
7
6
The tax system is largely aligned with the goal of minimizing compliance and collection costs.
5
4
3
4
3
The tax system is only somewhat aligned with the goal of minimizing compliance and collection costs.
2
1
1
The tax system is not at all aligned with the goal of minimizing compliance and collection costs.
Irish revenue administrative capacities are well-regarded and sufficient for collecting levied taxes, with effective public prosecution of tax evasion. However, there is a public perception that company-level tax evasion is less frequently prosecuted and that tax avoidance is facilitated. The tax system is efficient, well-digitalized and aligned with the goal of minimizing compliance costs.
However, the Tax Justice Network reports that Ireland loses $13,589,860,352 annually to global tax abuse, equivalent to 19% of its tax revenue ($72 billion) or $2,792 per capita. This places Ireland 11th worst in the world for tax loss. Tax administration capacity in Ireland is rated at 25, which is low compared to the global average of 47 (Tax Justice Network 2021). This is largely due to the facilitation of tax avoidance, though domestic tax administration scores highly for non-complexity.
While tax rules for basic income tax are relatively transparent and easy to understand, minimizing compliance costs for taxpayers (such as form filling and consulting fees), corporate tax rules are less transparent. Ireland has been accused of engaging in “tax games,” leading to high-profile legal battles with the EU and costly tax litigation.
Citations:
Tax Justice Network. 2021. “Corporate Tax Haven Index-2021 Results.” https://taxjustice.net/country-profiles/ireland/
However, the Tax Justice Network reports that Ireland loses $13,589,860,352 annually to global tax abuse, equivalent to 19% of its tax revenue ($72 billion) or $2,792 per capita. This places Ireland 11th worst in the world for tax loss. Tax administration capacity in Ireland is rated at 25, which is low compared to the global average of 47 (Tax Justice Network 2021). This is largely due to the facilitation of tax avoidance, though domestic tax administration scores highly for non-complexity.
While tax rules for basic income tax are relatively transparent and easy to understand, minimizing compliance costs for taxpayers (such as form filling and consulting fees), corporate tax rules are less transparent. Ireland has been accused of engaging in “tax games,” leading to high-profile legal battles with the EU and costly tax litigation.
Citations:
Tax Justice Network. 2021. “Corporate Tax Haven Index-2021 Results.” https://taxjustice.net/country-profiles/ireland/
To what extent do existing tax institutions and procedures internalize negative and positive externalities?
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9
9
The tax system is fully aligned with the goal of internalizing externalities.
8
7
6
7
6
The tax system is largely aligned with the goal of internalizing externalities.
5
4
3
4
3
The tax system is only somewhat aligned with the goal of internalizing externalities.
2
1
1
The tax system is not at all aligned with the goal of internalizing externalities.
Irish taxes and subsidies are underdeveloped in their capacity to address environmentally harmful behavior. However, a carbon tax has been introduced and will be increased over time by statute. Revisions to corporation tax have introduced positive externalities for corporate research and development, which arguably benefits the public. There are also limited tax subsidies for investment in personal education.
The share of environmental taxes in total tax revenue was low at 1.3% in 2021, down from 2.42% in 2006, and below the 2021 OECD average of 2% (OECD 2021). There has been substantial critique of the spillover impact of Irish taxation on the Global South. Killian (2020) documents case studies of Irish spillover effects and negative externalities on Kenya and other African states. Tax Justice Ireland highlights the impact of Irish tax policy on child development in the Global South. The Irish revenue system is well-regarded internationally for its administrative capacity and has contributed to capacity-building projects in Eastern Europe and beyond. It is not yet clear how recent OECD-led BEPS changes will impact negative and positive externalities, and Ireland is resisting some changes regarding the scope of what might be defined as corporate tax.
The Apple case is indicative of how Ireland handles externalities, often minimizing revenue intake and risking perceptions of complicity in tax avoidance, with potential compliance costs and reputational risks. After years of litigation regarding whether Ireland had facilitated Apple in avoiding the payment of €13 billion in corporate tax, the European General Court ruled in July 2020 that the European Commission “did not succeed in showing to the requisite legal standard” that Apple had received tax advantages from Ireland. However, the European Commission appealed this decision to the European Court of Justice. In November 2023, Advocate General Giovanni Pitruzzella recommended that the European Court of Justice annul the decision of the lower court, arguing that it did not correctly assess “the substance and consequences of certain methodological errors that, according to the Commission decision, vitiated the tax rulings.” The final judgment from the European Court of Justice is expected in 2024 and often reflects the Advocate General’s recommendations.
Citations:
OECD. 2021. OECD Environmental Performance Reviews: Ireland 2021. Paris: OECD Publishing. https://doi.org/10.1787/9ef10b4f-en
Tax Justice Network. 2022. “Ireland’s Responsibility for the Impacts of Cross-border Tax Abuse on the Realisation of Children’s Economic, Social and Cultural Rights.” https://taxjustice.net/wp-content/uploads/2022/08/Ireland_CRC_submission_august2022.pdf
Killian, S., O’Regan, P., Lynch, R., Laheen, M., and Karavidas, D. 2022. “Regulating Havens: The Role of Hard and Soft Governance of Tax Experts in Conditions of Secrecy and Low Regulation.” Regulation and Governance 16 (3): 722-737.
Tax Justice Network. 2021. “Corporate Tax Haven Index - 2021 Results.” https://taxjustice.net/country-profiles/ireland/
The share of environmental taxes in total tax revenue was low at 1.3% in 2021, down from 2.42% in 2006, and below the 2021 OECD average of 2% (OECD 2021). There has been substantial critique of the spillover impact of Irish taxation on the Global South. Killian (2020) documents case studies of Irish spillover effects and negative externalities on Kenya and other African states. Tax Justice Ireland highlights the impact of Irish tax policy on child development in the Global South. The Irish revenue system is well-regarded internationally for its administrative capacity and has contributed to capacity-building projects in Eastern Europe and beyond. It is not yet clear how recent OECD-led BEPS changes will impact negative and positive externalities, and Ireland is resisting some changes regarding the scope of what might be defined as corporate tax.
The Apple case is indicative of how Ireland handles externalities, often minimizing revenue intake and risking perceptions of complicity in tax avoidance, with potential compliance costs and reputational risks. After years of litigation regarding whether Ireland had facilitated Apple in avoiding the payment of €13 billion in corporate tax, the European General Court ruled in July 2020 that the European Commission “did not succeed in showing to the requisite legal standard” that Apple had received tax advantages from Ireland. However, the European Commission appealed this decision to the European Court of Justice. In November 2023, Advocate General Giovanni Pitruzzella recommended that the European Court of Justice annul the decision of the lower court, arguing that it did not correctly assess “the substance and consequences of certain methodological errors that, according to the Commission decision, vitiated the tax rulings.” The final judgment from the European Court of Justice is expected in 2024 and often reflects the Advocate General’s recommendations.
Citations:
OECD. 2021. OECD Environmental Performance Reviews: Ireland 2021. Paris: OECD Publishing. https://doi.org/10.1787/9ef10b4f-en
Tax Justice Network. 2022. “Ireland’s Responsibility for the Impacts of Cross-border Tax Abuse on the Realisation of Children’s Economic, Social and Cultural Rights.” https://taxjustice.net/wp-content/uploads/2022/08/Ireland_CRC_submission_august2022.pdf
Killian, S., O’Regan, P., Lynch, R., Laheen, M., and Karavidas, D. 2022. “Regulating Havens: The Role of Hard and Soft Governance of Tax Experts in Conditions of Secrecy and Low Regulation.” Regulation and Governance 16 (3): 722-737.
Tax Justice Network. 2021. “Corporate Tax Haven Index - 2021 Results.” https://taxjustice.net/country-profiles/ireland/
Graph View
To what extent do existing budgetary institutions and procedures support or hinder sustainable budgeting?
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9
9
Budgetary institutions and policies are fully aligned with the goals of sustainable budgeting.
8
7
6
7
6
Budgetary institutions and policies are largely aligned with the goals of sustainable budgeting.
5
4
3
4
3
Budgetary institutions and policies are only somewhat aligned with the goals of sustainable budgeting.
2
1
1
Budgetary institutions and policies are not at all aligned with the goals of sustainable budgeting.
Output indicators demonstrate progress in budget sustainability, moving from significant indebtedness during the 2008 crisis and a national bailout from 2010-2013 to substantial budget surpluses in recent years. Public debt in 2023 dropped to a still very high 44.7% of GDP (82% of GNI at the end of 2021). Existing budgetary institutions and procedures support sustainable budgeting but are relatively new, emerging from deep institutional learning since the crisis. The most important development is the Irish Fiscal Advisory Council (IFAC), formally established as a statutory body in December 2012, which publishes annual Fiscal Assessment Reports on the government’s fiscal stance, macroeconomic and fiscal forecasts, and compliance with fiscal rules. The latest IFAC assessment (2023) was highly critical of government budgetary policy, as was the ESRI (2023). IFAC has produced a long-term fiscal sustainability report for Ireland to 2050, suggesting that the government deficit will grow substantially in the coming decades (IFAC 2020). While IFAC adopts a forecast projection approach, standard in Irish policy analysis, significant uncertainties are associated with long-term forecasting (O’Mahony et al. 2023). As a result, there is a considerable risk that the deficit could be even larger than IFAC has noted. The Parliamentary Budget Office has highlighted that “a point estimate does not reveal the methodology used, its limitations, or the inherent uncertainties in the estimate” (PBO 2024), emphasizing that budgets are neither transparent nor strategically prepared for risk uncertainties.
The budget process is largely public and transparent, but subsidiary budgets are outside the normal budget, such as unbudgeted increases in healthcare, which are seen as excessive overspends indicative of a lack of oversight and accountability. The Parliamentary Budget Office has improved legislators’ capacity to engage with the budget cycle but faces challenges in conducting gendered audits, budgeting, research and analysis (Cullen 2021). The implementation of fiscal rules (e.g., a debt brake) has sometimes compelled policymakers to avoid continuous increases in government debt. Some budget lines explicitly address SDGs or other transformation goals, with target values like indexation or poverty targets associated with expenditures for economic and social development.
There is evidence of policy innovation in Ireland’s development of green budgeting, making it one of the first EU member states to do so (O’Mahony and Torney 2023). However, the green budgeting process is in its early stages and narrowly focused on climate, as illustrated in DoF (2021). This indicates that budgets are framed similarly to national climate action policy practices, overly dominated by technology transitions rather than systemic transformations necessary for addressing broader opportunities (O’Mahony and Torney 2023). While EU and domestic budgetary rules mandate the accumulation of financial reserves during economic expansions, continuous tension and political pressure prioritize current expenditure over budgetary rules that emphasize public investment and safeguard future investment opportunities.
Citations:
Cullen, P. 2021. “Gender Expertise and Policy Analysis.” In Policy Analysis in Ireland, eds. J. Hogan and M. P. Murphy, 203–216. Bristol: Bristol University Press. http://www.jstor.org/stable/j.ctv1hhj11n.23
IFAC. 2023. “The Government Needs a Serious Fiscal Framework Fiscal Assessment Report November 2022.” Irish Fiscal Advisory Council. https://www.fiscalcouncil.ie/fiscal-assessment-report-june-2023-2/
Houses of the Oireachtas. 2023. “The Parliamentary Budget Office (PBO).” https://www.oireachtas.ie/en/publications/?author=parliamentary-budget-offic
OECD. 2019. The Role of Evidence Informed Policy Making in Delivering on Performance: The Irish Government Economic and Evaluation Service. Paris: OECD.
ESRI. 2023. “Budget Perspectives 2024.” https://www.esri.ie/events/budget-perspectives-2024
IFAC. 2020. “Long-term Sustainability Report: Fiscal Challenges and Risks 2025-2050.” https://www.fiscalcouncil.ie/wp-content/uploads/2020/07/Long-Term-Sustainability-Report_Website.pdf
O’Mahony, T., Luukkanen, J., Vehmas, J., and Kaivo-oja, J.R.L. 2023. “Time to Build a New Practice of Foresight for National Economies? Ireland, and Uncertain Futures in Forecasts and Scenarios.” Foresight. https://doi.org/10.1108/FS-10-2021-0191
PBO (Parliamentary Budget Office). 2024. “Assessing the Uncertainty of Budget 2024 Costings: A Scorecard Approach.” https://data.oireachtas.ie/ie/oireachtas/parliamentaryBudgetOffice/2024/2024-02-07_assessing-the-uncertainty-of-budget-2024-costings-a-scorecard-approach_en.pdf
O’Mahony, T., and D. Torney. 2023. “Transforming Development: Economy, Innovation and Finance, Chapter 6.” Volume 4 of Irish Climate Change Assessment (2023). https://www.epa.ie/publications/monitoring–assessment/climate-change/ICCA_Volume-4.pdf
DoF. 2021. “Budget 2022: A Review of Green Budgeting from a Tax Perspective.” Department of Finance. https://assets.gov.ie/201243/56e364cf-9bfc-4993-b405-e34784b0c4bc
The budget process is largely public and transparent, but subsidiary budgets are outside the normal budget, such as unbudgeted increases in healthcare, which are seen as excessive overspends indicative of a lack of oversight and accountability. The Parliamentary Budget Office has improved legislators’ capacity to engage with the budget cycle but faces challenges in conducting gendered audits, budgeting, research and analysis (Cullen 2021). The implementation of fiscal rules (e.g., a debt brake) has sometimes compelled policymakers to avoid continuous increases in government debt. Some budget lines explicitly address SDGs or other transformation goals, with target values like indexation or poverty targets associated with expenditures for economic and social development.
There is evidence of policy innovation in Ireland’s development of green budgeting, making it one of the first EU member states to do so (O’Mahony and Torney 2023). However, the green budgeting process is in its early stages and narrowly focused on climate, as illustrated in DoF (2021). This indicates that budgets are framed similarly to national climate action policy practices, overly dominated by technology transitions rather than systemic transformations necessary for addressing broader opportunities (O’Mahony and Torney 2023). While EU and domestic budgetary rules mandate the accumulation of financial reserves during economic expansions, continuous tension and political pressure prioritize current expenditure over budgetary rules that emphasize public investment and safeguard future investment opportunities.
Citations:
Cullen, P. 2021. “Gender Expertise and Policy Analysis.” In Policy Analysis in Ireland, eds. J. Hogan and M. P. Murphy, 203–216. Bristol: Bristol University Press. http://www.jstor.org/stable/j.ctv1hhj11n.23
IFAC. 2023. “The Government Needs a Serious Fiscal Framework Fiscal Assessment Report November 2022.” Irish Fiscal Advisory Council. https://www.fiscalcouncil.ie/fiscal-assessment-report-june-2023-2/
Houses of the Oireachtas. 2023. “The Parliamentary Budget Office (PBO).” https://www.oireachtas.ie/en/publications/?author=parliamentary-budget-offic
OECD. 2019. The Role of Evidence Informed Policy Making in Delivering on Performance: The Irish Government Economic and Evaluation Service. Paris: OECD.
ESRI. 2023. “Budget Perspectives 2024.” https://www.esri.ie/events/budget-perspectives-2024
IFAC. 2020. “Long-term Sustainability Report: Fiscal Challenges and Risks 2025-2050.” https://www.fiscalcouncil.ie/wp-content/uploads/2020/07/Long-Term-Sustainability-Report_Website.pdf
O’Mahony, T., Luukkanen, J., Vehmas, J., and Kaivo-oja, J.R.L. 2023. “Time to Build a New Practice of Foresight for National Economies? Ireland, and Uncertain Futures in Forecasts and Scenarios.” Foresight. https://doi.org/10.1108/FS-10-2021-0191
PBO (Parliamentary Budget Office). 2024. “Assessing the Uncertainty of Budget 2024 Costings: A Scorecard Approach.” https://data.oireachtas.ie/ie/oireachtas/parliamentaryBudgetOffice/2024/2024-02-07_assessing-the-uncertainty-of-budget-2024-costings-a-scorecard-approach_en.pdf
O’Mahony, T., and D. Torney. 2023. “Transforming Development: Economy, Innovation and Finance, Chapter 6.” Volume 4 of Irish Climate Change Assessment (2023). https://www.epa.ie/publications/monitoring–assessment/climate-change/ICCA_Volume-4.pdf
DoF. 2021. “Budget 2022: A Review of Green Budgeting from a Tax Perspective.” Department of Finance. https://assets.gov.ie/201243/56e364cf-9bfc-4993-b405-e34784b0c4bc
Graph View
How committed is the government to utilizing research and innovation as drivers for the transition to a sustainable economy and society?
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9
9
The government is clearly committed to utilizing research and innovation as drivers for the transition to a sustainable economy and society.
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6
7
6
The government is largely committed to utilizing research and innovation as drivers for the transition toward a sustainable economy and society.
5
4
3
4
3
The government is somewhat committed to utilizing research and innovation as drivers for the transition toward a sustainable economy and society.
2
1
1
The government is not at all committed to utilizing research and innovation as drivers for the transition toward a sustainable economy and society.
In 2023, the Department and Minister for Higher and Further Education, Research, Innovation and Skills (DHFERIS) oversaw the merger of the Science Foundation Ireland (SFI) and the Irish Research Council (IRC) into The Research and Innovation Agency (Taighde Éireann-Research Ireland). Although its launch was not explicitly linked to sustainable goals, it was connected to climate change, poverty, economy, and society. The agency is regulated by the binding Research and Innovation Bill (2023). This approach is arguably more central and sustainable than previous economic innovation-oriented organizations, such as Forfás (1994; the national policy advisory board for enterprise, trade, science, technology and innovation) or the National Competitiveness Council (1997), which analyzed data on sectors of the Irish economy. The World Economic Forum’s Global Competitiveness Report 2023 ranked Ireland 2nd out of 64 countries in terms of global competitiveness (11th in 2022), based on the ability to create and maintain a competitive business environment. However, Enterprise Ireland (2023) highlights that venture capital for scaling up from small to medium enterprises remains a long-term problem in Ireland, hindering an innovation-friendly environment that enables startups to effectively translate scientific advancements into more resource-efficient products.
Ireland’s Climate Change Assessment (O’Mahony and Torney 2023) considers the national public innovation policy as evolving toward further embracing climate action, as seen in the recent national innovation strategy ‘Impact 2030’ (DFHERIS 2022). The assessment notes that Impact 2030 uses terminology and framing associated with systems change and deeper integration associated with transformation. However, it has not employed transformational time frames extending to 2050 and beyond. The assessment also highlighted that the absence of a strategic assessment of long-term impacts and opportunities in Ireland, combined with limited transformational policy framings, negative conclusions on transition, and constrained funding for climate and sustainability-related R&D, suggests a misalignment of national research, innovation and investment with transformational outcomes and associated benefits (O’Mahony and Torney 2023).
The assessment acknowledged that Irish innovation policy has evolved and is framed differently by various public policy actors. It also noted the strengths of the recent research and innovation strategy to 2030 (DFHERIS 2022), which includes climate, environment and sustainability as one of five key challenges and opportunities. However, international observers have pointed out weaknesses in Ireland’s innovation system, including low R&D funding, unbalanced support for businesses, and insufficient cooperation between firms and research bodies (European Commission 2020). The OECD (2021) noted that overall funding for R&D in Ireland, both public and private, is half the EU average when measured as a percentage of GDP. Furthermore, government funding for R&D is relatively dominated by agriculture, at 13% in 2019, while environment and energy received only 2% of government R&D funding, among the lowest shares across the OECD.
Citations:
International Institute for Management. 2023. World Competitiveness Rankings. IMD.
Donnelly, E. 2023. “Irish Businesses Have ‘Huge’ Difficulty Getting Venture Capital Investment.” Business Post, November 4.
Cahill, N. and FitzGerald, C. 2023. Is Ireland Thriving? Answers from International Assessments. Dublin: NESC.
NCPC. 2023. Ireland’s Competitiveness Scorecard 2023. Dublin: National Council for Productivity and Competitiveness.
O’Mahony, T., and D. Torney. 2023. Transforming Development: Economy, Innovation and Finance, Chapter 6 Volume 4 of Irish Climate Change Assessment. https://www.epa.ie/publications/monitoring–assessment/climate-change/ICCA_Volume-4.pdf
DFHERIS. 2022. Impact 2030: Ireland’s Research and Innovation Strategy. Department of Further and Higher Education, Research, Innovation and Science. https://assets.gov.ie/224616/5f34f71e-e13e-404b-8685-4113428b3390.pdf
European Commission. 2020. Commission Staff Working Document: Country Report Ireland 2020. SWD(2020) 506 final. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020SC0506&from=EN
OECD. 2021. OECD Environmental Performance Reviews: Ireland 2021. OECD iLibrary. https://doi.org/10.1787/9ef10b4f-en
Ireland’s Climate Change Assessment (O’Mahony and Torney 2023) considers the national public innovation policy as evolving toward further embracing climate action, as seen in the recent national innovation strategy ‘Impact 2030’ (DFHERIS 2022). The assessment notes that Impact 2030 uses terminology and framing associated with systems change and deeper integration associated with transformation. However, it has not employed transformational time frames extending to 2050 and beyond. The assessment also highlighted that the absence of a strategic assessment of long-term impacts and opportunities in Ireland, combined with limited transformational policy framings, negative conclusions on transition, and constrained funding for climate and sustainability-related R&D, suggests a misalignment of national research, innovation and investment with transformational outcomes and associated benefits (O’Mahony and Torney 2023).
The assessment acknowledged that Irish innovation policy has evolved and is framed differently by various public policy actors. It also noted the strengths of the recent research and innovation strategy to 2030 (DFHERIS 2022), which includes climate, environment and sustainability as one of five key challenges and opportunities. However, international observers have pointed out weaknesses in Ireland’s innovation system, including low R&D funding, unbalanced support for businesses, and insufficient cooperation between firms and research bodies (European Commission 2020). The OECD (2021) noted that overall funding for R&D in Ireland, both public and private, is half the EU average when measured as a percentage of GDP. Furthermore, government funding for R&D is relatively dominated by agriculture, at 13% in 2019, while environment and energy received only 2% of government R&D funding, among the lowest shares across the OECD.
Citations:
International Institute for Management. 2023. World Competitiveness Rankings. IMD.
Donnelly, E. 2023. “Irish Businesses Have ‘Huge’ Difficulty Getting Venture Capital Investment.” Business Post, November 4.
Cahill, N. and FitzGerald, C. 2023. Is Ireland Thriving? Answers from International Assessments. Dublin: NESC.
NCPC. 2023. Ireland’s Competitiveness Scorecard 2023. Dublin: National Council for Productivity and Competitiveness.
O’Mahony, T., and D. Torney. 2023. Transforming Development: Economy, Innovation and Finance, Chapter 6 Volume 4 of Irish Climate Change Assessment. https://www.epa.ie/publications/monitoring–assessment/climate-change/ICCA_Volume-4.pdf
DFHERIS. 2022. Impact 2030: Ireland’s Research and Innovation Strategy. Department of Further and Higher Education, Research, Innovation and Science. https://assets.gov.ie/224616/5f34f71e-e13e-404b-8685-4113428b3390.pdf
European Commission. 2020. Commission Staff Working Document: Country Report Ireland 2020. SWD(2020) 506 final. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020SC0506&from=EN
OECD. 2021. OECD Environmental Performance Reviews: Ireland 2021. OECD iLibrary. https://doi.org/10.1787/9ef10b4f-en
Graph View
How committed and credible is the government in its activities to guide the effective regulation and supervision of the international financial architecture?
10
9
9
The government is clearly committed to ensuring the stability of the global financial system.
8
7
6
7
6
The government is largely committed to ensuring the stability of the global financial system.
5
4
3
4
3
The government is somewhat committed to ensuring the stability of the global financial system.
2
1
1
The government is not at all committed to ensuring the stability of the global financial system.
Ireland has played a central role in international challenges related to high-risk financial activities and tax havens. The financial crisis and economic recession that began in 2008 were particularly severe in Ireland due to high-risk banking practices and limited regulatory control. However, oversight has significantly increased in the years that followed. In contrast, Ireland’s status as an international tax haven remains problematic. The EU Tax Observatory’s “Global Tax Evasion Report” suggests that Ireland is the second-largest profit-shifting destination globally, with over $140 billion shifted there in recent years (EU Tax Observatory 2023).
Corporate tax revenues for Ireland have surged since 2015, despite the low corporate tax rate of 12.5%, and a 6.25% rate for royalties introduced with the patent box regime in 2015. In 2022, Ireland collected the equivalent of €4,500 in corporate income tax revenue per inhabitant, nearly five times as much as France or Germany, which have much higher corporate tax rates. The Observatory notes that some of this growth may reflect the relocation of real activities, standard tax competition for capital, but they do not provide confidence that more than a small fraction is related to this. Instead, they attribute the increase mainly to the relocation of intangible assets following BEPS, the Tax Cuts and Jobs Act, and the introduction of the 6.25% tax rate (EU Tax Observatory 2023).
Ireland’s 12.5% corporate tax rate was one of the lowest in the OECD. The Irish government has since cooperated with the OECD BEPS changes, raising the base rate to 15%. However, some commentators believe that the government may not be fully implementing relevant international agreements to prevent and combat high-risk financial activities and that Ireland still has tax haven characteristics (Murphy 2023). To address this, the government has taken steps to enhance information transparency in international financial markets, particularly regarding non-bank financial intermediaries, and to strengthen consumer protection, largely under EU directives. Ireland now appears committed to ensuring the stability of the global financial system, playing a leading role in EU financial institutions, with senior Fine Gael Minister Paschal Donoghue chairing the 18-nation Eurogroup and Mairead McGuinness, a former MEP and vice president of the European Parliament, serving as the European Commissioner for Financial Stability, Financial Services, and the Capital Markets Union since October 2020.
However, the EU Tax Observatory also suggests that the global minimum tax is wholly insufficient because it preserves – and even strengthens – international tax competition. The global minimum tax allows firms to keep effective tax rates below 15% as long as they have sufficient real activity in low-tax countries. This exemption – a carve-out for economic substance – provides incentives for multinational companies to move production to very low-tax countries (EU Tax Observatory 2023).
Citations:
Murphy, R. 2023. “Does tax abuse by multinationals and the wealthy cost the world $5 trillion?” Tax Policy Associates Ltd.
EU Tax Observatory. 2023. “Global Tax Evasion Report 2024.” https://www.taxobservatory.eu/publication/global-tax-evasion-report-2024/
Corporate tax revenues for Ireland have surged since 2015, despite the low corporate tax rate of 12.5%, and a 6.25% rate for royalties introduced with the patent box regime in 2015. In 2022, Ireland collected the equivalent of €4,500 in corporate income tax revenue per inhabitant, nearly five times as much as France or Germany, which have much higher corporate tax rates. The Observatory notes that some of this growth may reflect the relocation of real activities, standard tax competition for capital, but they do not provide confidence that more than a small fraction is related to this. Instead, they attribute the increase mainly to the relocation of intangible assets following BEPS, the Tax Cuts and Jobs Act, and the introduction of the 6.25% tax rate (EU Tax Observatory 2023).
Ireland’s 12.5% corporate tax rate was one of the lowest in the OECD. The Irish government has since cooperated with the OECD BEPS changes, raising the base rate to 15%. However, some commentators believe that the government may not be fully implementing relevant international agreements to prevent and combat high-risk financial activities and that Ireland still has tax haven characteristics (Murphy 2023). To address this, the government has taken steps to enhance information transparency in international financial markets, particularly regarding non-bank financial intermediaries, and to strengthen consumer protection, largely under EU directives. Ireland now appears committed to ensuring the stability of the global financial system, playing a leading role in EU financial institutions, with senior Fine Gael Minister Paschal Donoghue chairing the 18-nation Eurogroup and Mairead McGuinness, a former MEP and vice president of the European Parliament, serving as the European Commissioner for Financial Stability, Financial Services, and the Capital Markets Union since October 2020.
However, the EU Tax Observatory also suggests that the global minimum tax is wholly insufficient because it preserves – and even strengthens – international tax competition. The global minimum tax allows firms to keep effective tax rates below 15% as long as they have sufficient real activity in low-tax countries. This exemption – a carve-out for economic substance – provides incentives for multinational companies to move production to very low-tax countries (EU Tax Observatory 2023).
Citations:
Murphy, R. 2023. “Does tax abuse by multinationals and the wealthy cost the world $5 trillion?” Tax Policy Associates Ltd.
EU Tax Observatory. 2023. “Global Tax Evasion Report 2024.” https://www.taxobservatory.eu/publication/global-tax-evasion-report-2024/