Sir, – The Department of Finance’s Tax Strategy Group report, presented this month, has shown the dramatic growth in income tax yield to this State over the past 10 years, growing from €10.5 billion in 2013 to €25.4 billion in 2023.
The Tax Strategy Group says that 7 per cent of all taxpayers are exempt from income tax this year, 64 per cent of taxpayers pay the standard (lower) rate of income tax but circa one million of these taxpayers’ income tax liability is fully covered by their tax credits, and that only 29 per cent of taxpayers pay the higher rate of income tax. Most noteworthy of all, the top 5 per cent of taxpayers will pay 48.5 per cent of all income tax and USC this year and the top 1 per cent will pay 24.4 per cent, illustrating a huge imbalance and concentration vulnerability in our highly progressive taxation system. It further points to the strongly redistributive nature of the tax and welfare system in Ireland.
The Tax Strategy Group therefore warns that this income tax concentration risk is such “that high marginal tax rates may have adverse consequences inter alia for work incentives and competitiveness including the ability to attract inward investment”.
Ireland’s left-wing parties intend to increase this risk if in government. For example, Sinn Féin’s taxation plans would be punitive for higher earning employees of multinational companies, and highly uncompetitive on a Europe-wide basis, for all higher-earning employees in this State. Sinn Féin plans to remove tax credits on incomes above €100,000 and introduce a punishing new 3 per cent tax on incomes above €140,000, on top of all the existing taxes, ignoring the warnings of the Department of Finance. The party also plans to significantly increase employers’ PRSI for higher earners and to 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 inheritance tax on children of deceased parents. 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. Sinn Féin also says it will also increase stamp duty on higher valued residential properties.
Surely we cannot expect that multinational firms and their high-earning employees will be willing to locate in a country where the primary objective of leftist taxation policy is to make the few pay for the many to an even greater extent than they already do. The international mobility at the higher earning segment of the labour market presents a very significant risk that the highest quality jobs are at risk of locating elsewhere.
The taxation plans not just of Sinn Féin, but also Labour, the Social Democrats and People Before Profit, all of which want more tax levied on those who already pay most, could have a real impact on our economy if in government. – Yours, etc,
MARK MOHAN,
Dublin 15.