Letters

Taxation policies in a time of uncertainty

A clear expression of priorities – but whose priorities?

Sat Aug 13 2022 - 00:14

Sir, – Compared to most other countries, even those with leftist governments, the Irish tax and welfare systems contribute strongly to the redistribution of income and ongoing reduction in income inequality. The Irish income tax system has become more progressive over time under successive governments and ranks indisputably as one of the most progressive in the OECD.

Further, the Irish Government presently spends more on health and housing than the vast majority of our peers. Ireland’s taxation and welfare systems are even more progressive than the much-celebrated Scandinavian countries that leftists champion, but it seems that most voters are unaware, or perhaps disinterested. Instead a culture of selective distortion, populist narratives, personal frustrations and faux rage have become mainstream.

Sinn Féin’s economic story is that it can increase taxes on employment, higher earners, wealth and capital, inheritance and property transactions without negatively affecting our open economy, where presently trade and investment flourish, employment booms and tax revenues already demonstrate impressive buoyancy. Sinn Féin claims its additional taxation plans will have no negative consequences on employment, productivity, wealth creation and tax yields. The party plans to introduce a new 3 per cent tax on incomes above €140,000 and to remove tax credits on incomes above €100,000, to significantly increase employers’ PRSI, to reduce the standard fund threshold for private pensions and lower the earnings contributions cap for allowable reliefs, to remove the special assignee relief programme for multinational employees which is designed to attract and keep investment capital in Ireland. Sinn Féin also plans to increase the rates of capital gains tax and capital acquisitions tax and to reduce the threshold for inheritance tax so as to levy more tax on children of deceased parents, to introduce a new annual wealth tax, to increase stamp duty on higher-valued residential properties and on all commercial properties.

The message from Sinn Féin is that it can extract ever-increasing taxation from the productive sector, employers, investors, multinationals and higher earners and these stakeholders will simply succumb, with no negative consequences on employment, productivity, wealth creation and tax yields. Reality, should these policies be implemented, will be very different. Taxation yields will fall and public services and investment will ultimately suffer. The mobility of multinational capital, investment, wealth and employment must be properly assessed. We must at least commence the process of reviewing the experiences of other countries where governments led by leftist parties have come to power. The assessment must include detailed analysis of the likely impact on economic growth, on business investment, on employment and, crucially, on tax yield available for redistribution, public services and climate change investment. And of course in Ireland there is the huge complication of Sinn Féin’s primary objective to deliver a unified socialist state. The implications of their likely actions in pursuit of that objective must be contemplated in the wider assessment of consequences. – Yours, etc,

READ MORE

MARK MOHAN,

Castleknock,

Dublin 15.

Sir, – Someone once said that budgets are moral documents and should mirror the values and priorities of the people.

Tánaiste Leo Varadkar pledges a “very substantial” income tax cut in the upcoming budget (“Coalition pledges tax package to benefit almost all workers”, News, August 11th). To do so in current circumstances is a clear expression of priorities – but whose priorities?

Does Mr Varadkar think that we would prefer to have our income tax liabilities reduced at the expense of solving the housing crisis or delaying the creation of a one-tier healthcare system? Does he think that we care little for children in poverty or the many lone parents who are rearing the future in constant deprivation?

Does he really think so little of us that he considers his proposals, at this time, to be a reflection of who we are? – Yours, etc,

JIM O’SULLIVAN,

Rathedmond,

Sligo.