Covid-19: Minister seeks ‘solidarity tax’ on high earners and firms ‘highly profitable’ in pandemic
Green TD Joe O’Brien said move could offset potential of deepening inequality
Joe O’Brien said there is a ‘very good chance’ that the rate of consistent poverty went up last year due to the impact of Covid-19. Photograph: Dara Mac Dónaill
Green Party Minister Joe O’Brien is pushing Government colleagues for a “one-off solidarity tax” on high earners and firms that were “highly profitable” during the pandemic.
Such a tax would show solidarity with those worst hit by the economic fallout from Covid-19, he said, and provide a “very real and tangible economic mechanism that could help offset the potential of the pandemic to deepen inequality”, he said on Monday.
Mr O’Brien, who is Minister of State with responsibility for social inclusion, has written to Minister for Finance Paschal Donohoe and Minister for Public Expenditure and Reform Michael McGrath advocating for the idea, which was proposed last week by the International Monetary Fund.
Addressing the social inclusion forum on Monday, Mr O’Brien said there is a “very good chance” that the rate of consistent poverty went up last year due to the impact of Covid-19, making it more difficult to hit the State’s target of lowering the rate to two per cent from its 2019 level of 5.5 per cent. “So even if times were ‘normal’ so to speak, if we are to reach the two per cent target we need to do something different,” he said, adding: “But times are not normal”.
He told the forum he had written to ask that Mr Donohoe “give serious consideration” to the proposal for “a once off solidarity tax particularly high earners and firms that were highly profitable during the pandemic”.
Last week, IMF head of fiscal affairs Vitor Gaspar said a symbolic rise in taxation from those who have prospered over the past year would strengthen social cohesion, even if there was not a pressing need to repair the public finances.
Technology firms such as social networking, payments and video calling companies have benefitted from the pandemic, as have some telecommunications outfits, pharmaceutical companies and online shopping platforms.
While many thousands of jobs in Ireland have been lost, the relative strength of the income tax head indicates many better-paid jobs have been insulated from the worst effects of the pandemic. Meanwhile, household savings rates have skyrocketed to record levels, with an additional €14.2 billion in deposits during 2020 after restrictions curtailed spending on goods and services.
In a letter to Mr Donohoe seen by The Irish Times, Dublin Fingal TD Mr O’Brien wrote that “there is the very real scenario that some are accumulating savings and/or wealth during this time while others are facing severe financial distress that is worsening the longer the pandemic remains”.
He asked for a discussion to “explore the possibility of such an option in an Irish setting as we look to forge a pathway out of the current crisis”.
A spokeswoman for Mr Donohoe said he has “no plans to make any further changes to the taxation of businesses other than through the OECD process, to which he is committed. Any additional proposals should be tabled with the Commission on Taxation and Welfare.”