Sir, – Ireland has an obvious competitiveness problem with income tax and the Department of Finance has said that the high concentration of income tax paid by relatively few higher earning employees is a major risk to the Irish tax base. The Department of Enterprise, Trade and Employment has also identified Ireland’s high marginal tax rates as a negative factor to be overcome when attracting skilled staff and foreign direct investment. The American Chamber of Commerce and the Irish Taxation Institute identify the same problem. It is clear that the mobility at the higher earning segment of the labour market internationally presents a very significant risk that the highest quality jobs will not come to Ireland given the high tax rates here. Indeed, many of those already here are at risk of moving. Feedback to major employer, investor and economic bodies suggests a brewing problem, which will be badly compounded given a likely outcome to the next general election. These major representative bodies have warned of the issues, but Sinn Féin and other leftist parties believe they know better.
The taxation plans of Sinn Féin, Labour, the Social Democrats and People Before Profit, all of whom want more tax levied on those who already pay most, will have a real impact on Ireland’s economy. Cliff Taylor asks the relevant question (“How will Sinn Féin’s plan to tax the rich affect the economy?”, Opinion & Analysis, November 4th).
Sinn Féin plans to remove tax credits on incomes above €100,000 and introduce a new 3 per cent tax on incomes above €140,000, on top of all the existing income taxes. The party will also increase employers’ PRSI for higher earners and reduce the standard fund threshold for private pensions – hitting employers and those who cater for their own private pension. Sinn Féin also plans to increase the rate of capital acquisitions tax to 36 per cent, levying more tax on children of deceased parents.
Perhaps most damaging of all, the party says it is in favour of a new annual wealth tax – a tax that is likely to drive investment and wealth out of our highly open Irish economy.
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The harsh truth is that Sinn Féin’s scorched earth tax policies apply to less than 5 per cent of income earners, probably around 150,000 people from a total Revenue tax file of over 3.4 million income earners. The Left has decided to go hard after the few who already pay the most in the hope that enough of them will stay here to prop-up the country’s tax intake. This is short-term populist thinking at the extreme – appealing to the masses that it is going after the so-called wealthy.
The Department of Finance has confirmed that the most significant risk in our taxation system is the overdependence on a small base of higher-paid employees and multinational companies. Sinn Féin intends to ignore this reality, bringing the departure from Ireland of many high tax-yielding employees and multinational companies. Ireland will suffer accordingly. – Yours, etc,
MARK MOHAN,
Dublin 15.