Sir, – I don’t think anyone can seriously make the case that the current Government is miserly in its spending. But Sinn Féin’s pre-budget submission would entail additional expenditure of €3.5 billion, which would see more houses and hospital beds, earlier pensions, lower rents and greatly reduced childcare costs. And we would no longer have to pay the property tax.
All this would be achieved without any increase in borrowing for current expenditure but with a series of tax measures, including a 3 per cent "solidarity tax", which would raise €1.9 billion each year from higher earners (News, 8October 8th).
Irish middle- and high-income earners already have one of the heaviest income tax burdens in the developed world and may feel that they are already showing a tolerable level of solidarity. But of course Sinn Féin’s support is strongest among the one-third of income earners in Ireland who pay no income tax. Its proposals – expenditures which benefit the masses and tax increases which affect the relatively few who are well-off – make perfect political sense but are questionable from a fiscal perspective.
Take one example – its proposal to abolish the Special Assignee Relief Programme (Sarp), a tax break given to what the party describes as the “richest multinational employees”. Its abolition, Sinn Féin claims, would provide €42 million to spend elsewhere each year. It would do nothing of the sort. The Sarp programme is designed to attract to Ireland executives in multinational companies who would not readily choose to avail themselves of one of the highest tax burdens anywhere in the world. It operates by taking 30 per cent of the assignee’s income out of the charge to Irish income tax. This means that 70 per cent of income up to €1 million and all income in excess of that figure is subject to Irish income tax while the entire income is subject to USC and PRSI in the normal way.
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The abolition of Sarp will not, as Sinn Féin claims, provide €42 million to spend elsewhere each year. Rather it would result in a loss of tax revenues of a multiple of that figure once assignees get the message and take their talents – and their tax liabilities – elsewhere. But of course that will not concern Sinn Féin. They will be able to play the populist “soak the rich” card and to hell with the consequences.
There is a related point. The most recent available figures from the Revenue Commissioners show that taxpayers with income in excess of €100,000 accounted for about 6 per cent of the total population of taxpayers but 48 per cent of the income tax take. Sinn Féin would do well to remember that not a few of these patriots have some flexibility in where they locate themselves for tax purposes. I forget who said that a government which robs Peter to pay Paul can always rely on Paul’s support. But he might have added that Peter may not hang around if he is made feel too unwelcome. – Yours, etc,
PAT O’BRIEN,
Rathmines,
Dublin 6 .
Sir , – Sinn Féin’s income tax policy is that those who earn over €100,000 would have a reduced tax-free allowance on a tapered basis, while those who earn over €140,000 would pay an additional solidarity tax of 3 per cent. A solidarity tax is a super-tax in all but name. – Yours, etc,
BRENDAN O’CARROLL,
Tralee, Co Kerry.