Cantillon: Sinn Féin find bond with Bundesbank
Gerry Adam’s wealth tax suggestion has some friends in unlikely places
When Gerry Adams was pressed to explain how he would make up for the funding shortfall created by his putative abolition of residential property tax, he reluctantly offered up the prospect of a wealth tax
The links between Irish republicans and Germany have always been controversial, to say the least. But not since Pádraig Pearse made reference to our gallant allies in Europe on the steps of the GPO in 1916 has Sinn Féin found such common cause with the Germans.
This time it is not the Kaiser but the Bundesbank instead. When party leader Gerry Adams (right) was pressed over the weekend to explain how he would make up for the funding shortfall created by his putative abolition of residential property tax, he reluctantly offered up the prospect of a wealth tax. His reluctance was understandable as a wealth tax is synonymous with old-school “loony left” economics and attempts to balance the books using one are easily ridiculed by opponents. But perhaps the wealth tax is a tax whose time has finally come.
In its most recent monthly report the Bundesbank suggested that countries about to go bankrupt should draw on the private wealth of their citizens through a once-off capital levy before asking other states for help. A once-off capital levy is another word for a wealth tax and it chimes with the “principle of national responsibility, according to which taxpayers are responsible for their government’s obligations before solidarity of other states is required”, says the Bundesbank .
The IMF proposed something similar late last year. It reckoned that for a sample of 15 euro area countries, a tax rate of about 10 per cent on households with positive net wealth would be required to reduce sovereign debt ratios to end-2007 levels. Sinn Féin could perhaps borrow some of the Bundesbank and IMF’s clothes for their wealth tax on the basis that if we had implemented a wealth tax back in 2007 then perhaps we might not need a residential property tax now.
Or at least we might not need such a big one. However, if as seems likely, Sinn Féin are talking about some sort of ongoing super tax rather than a once-off levy, then they might once again find themselves abandoned by their allies.