Wealth tax: Farmers and business people bitterly opposed tax measure, writes Alison Healy.
Plans to introduce a wealth tax were vehemently opposed by many well-known farmers and business people in 1974, according to records in the National Archives.
The wealth tax was part of a new capital taxation plan produced by the Fine Gael/Labour coalition. The minister for finance, Mr Richie Ryan, said wealth tax would be a substitution for death duties and would be better than leaving a huge bill for bereaved relatives. However, the unpopular tax was shortlived and was abolished after Fianna Fáil swept into power with a large majority in 1977.
Many Fine Gael supporters wrote to the taoiseach, Mr Liam Cosgrave, threatening to leave the country, or more dramatically, vote for Fianna Fáil, if the tax went ahead.
Racehorse trainer Mr Vincent O'Brien wrote to Mr Cosgrave warning him that the tax would have a "detrimental effect" on the bloodstock industry. "As you are aware, my establishment is supported almost exclusively by foreigners and as such, if the proposals on wealth tax go through as outlined, these people will undoubtedly withdraw their patronage," he said.
Mr O'Brien said other trainers and stud owners were in the same position and the resultant loss of investment and employment would be widespread. He said he had built up his business at Ballydoyle through his own efforts and every penny had been ploughed back into the business. "It seems unreasonable and unjust that I should now be taxed annually on the value of the assets which I have thus built up over the years. If this wealth tax becomes law, I cannot see how I can carry on, either as a trainer or a farmer," he wrote.
He pointed out that the bloodstock industry was exempted from this tax in England and there were "good grounds" for following this lead.
Mr John Bruton, who was parliamentary secretary to the minister for education, wrote to the taoiseach twice on the same day over the wealth tax. He said he had been approached by "the most prominent workers of two branches in the North Kildare portion of my constituency". They felt they would be "seriously inhibited in canvassing very many of the party's known supporters in this part of my constituency" if the proposed taxation measures were introduced. He listed prominent farmers and business people and said he was receiving "a very heavy volume of correspondence" on the issue.
Mr Bruton said the wealth tax proposal had "fundamentally shaken the confidence of many of our supporters, to such a degree that at this stage they are unlikely to be satisfied with anything less than the complete withdrawal of the wealth tax".
Mr Bruton's second letter stated that he had been approached by an IFA delegation in Meath and they indicated that the wealth tax proposals were "totally unacceptable".
"You know I have strong family associations with the IFA and its individual members played no small part in my election to the Dáil in the last two general elections. I therefore take this organisation very seriously," he wrote.
Mr Cosgrave also received a letter from Marquis Conyngham of Slane Castle. While he accepted the need for a fairer system of taxation, he said the proposed wealth tax was "both ill-conceived and unfair".
Changes were made to the proposed tax in May 1974 with bloodstock, livestock and pension rights being excluded.
Wealth tax plans: background
The plans for a wealth tax came in the middle of a very bleak economic period at home and abroad. It was characterised by global inflation, an energy crisis and an unprecedented surge in world commodity prices.
In 1973, the cost of imported materials increased at a rate that was seven times higher than the previous year. This led to rising consumer prices. Construction costs also soared in 1974. The 1974 budget reduced the top rate of income tax from 80 to 70 per cent and brought farmers into the tax net properly for the first time. 400,000 man-days were lost through strikes in the first six months of 1974.
As the year ended, the inflation rate was nearly 20 per cent.