Sinn Féin will drop its calls for a wealth tax in next month’s budget as part of a dramatic departure from its approach to balance the State’s finances.
The principle of a wealth tax of 1 per cent on assets above €1 million has been an integral part of Sinn Féin’s pre-budget submission since 2010 along with a third 48 per cent tax rate and a cap of €100,000 on public sector salaries.
It has claimed that a wealth tax could yield €800 million to the State each year.
However, the reliability of the party's figures was questioned by tax expert and barrister Suzanne Kelly who cast doubts on the sources of its calculations and the amount of tax that would be raised.
It led to scrutiny and criticism of the policy from its opponents.
The party has responded by leaving out any proposals for a wealth tax in its pre-budget submission, due out this month.
Special category
Finance spokesman Pearse Doherty told The Irish Times the party is still committed to a wealth tax but will not include it in its submission this year. He said Sinn Féin will deal with wealth assets as a special category, with all revenue generated being ring-fenced for job creation.
He said the decision was made because it was not possible to say with any certainty at present how much would be raised by a wealth tax. He said definite figures would only become available when the Central Statistics Office began collating data for personal wealth next year.
“It’s not disputed that a wealth tax will bring in hundreds of millions of euro,” said Mr Doherty, but he pointed out that estimates varied from €400 million to €800 million.
“Instead of putting the measure in and leaving ourselves open to the accusation that this is not costed, we will [leave it out] and rely on other measures to reduce the deficit to the target amount.”
Mr Doherty said the party's submission would propose reducing the deficit by "slightly over €2 billion", somewhat short of the €3.1 billion being pressed for by elements in Fine Gael and by the troika.
He asserted this figure would be sufficient to meet international obligations, but would also encourage jobs and growth.
Tough challenge
Sinn Féin's opposition to the property tax will mean it will have to find €500 million in alternative measures.
Mr Doherty accepted that this will be a tough challenge. He said the focus was on fairness, protecting the public services, jobs, emigration and ensuring youth employment.
The third rate of tax of 48 per cent for those earning over €100,000 would be a key component, but he said the party was varying its policy of a cap of €100,000 on public salaries.
“It was a blunt instrument that was introduced as an emergency measure during the crisis. We have a more considered approach that is conscious of what happened in the Haddington Road Agreement [on public sector pay]. We are introducing the first step of that. There will be grades of reduction for those earning above €100,000,” he said.
It is expected the party will also propose cuts in politicians’ pay.
