Bríd Smith presses minister on wealth tax, inequality

Just following on from the discussion I'm hearing here, I think the question I'm about to ask you is quite significant because we're constantly being told that there isn't enough resources to do all that we have to do to deal with the various crises. I want to ask you, Minister, if you've looked at the recent Oxfam report that dealt on wealth taxes and the problems with previous attempts across the European Union to introduce wealth taxes, and if you have any plans in this regard in the coming period. At the outset, I want to thank Deputy for bringing this recently publicised paper on wealth taxation, which was just recently published by Emmanuel Sayes and Gabrielle Zucman to the attention of the Department of Finance. The paper has currently been reviewed, but in summary it describes the historical experience of wealth taxation in Europe and draws lessons from this. It concludes that wealth tax base was narrow in European countries due to large exemptions, tax abiding and evasion. The paper explains why such exemptions were granted and how the authors contend they undermined European wealth taxes. The paper examines the issue from an EU-wide lens with some discussions on specific countries, but it does not refer to Ireland, so it's important that we put that in context. It's a European report that doesn't specifically refer to Ireland, and I want to acknowledge that the Deputy has highlighted that, and it is currently being examined. While the Government understands the background and calls for specific wealth taxes in Ireland, it's important that people listening today, contrary to the general impression of some people who call for such a tax, it's not the case that a wealth tax doesn't exist in Ireland, and Ireland's wealth is taxed, as taxes on wealth are already in place. The wealth taxes include capital gains tax, which is quite significant, and I think most people who buy or sell houses or property will be aware of that, and the capital acquisition tax, and also the local property tax, which between them, according to the revenues annual report for 2001, raised 2.77 billion net last year. So the wealth taxes in Ireland, and the biggest wealth in Ireland is the value of people's own households. That is the single biggest wealth, and we do have actually a wealth tax on that, notwithstanding some parties that are left to oppose that particular wealth tax. Any revenue raised from any new wealth tax may not therefore be additional to the existing forms of wealth tax that are already in place, as revenues from those taxes could be affected by the introduction of any new taxes. And in terms of the broader issue of inequality, it's important to note that the taxation system in Ireland is deemed generally progressive by most independent observers. Right, I don't want to go down a rabbit hole of arguing with you about the significance of the property tax. I mean, you say that people's homes is the biggest form of wealth. For many people, it's a struggle just to keep the roof over their head, pay the mortgage, etc. And putting the property tax on those who can ill afford it is, I think, obscene. However, that's not what I'm here to argue. And although you're evading my question in relation to tax and wealth in this country, because it's not directly in the Oxfam report, if you use the method they apply, first thing they point out is that the wealth of the top of society has increased hugely. In Ireland, nine billionaires have seen their wealth increase by €18 billion since the start of the pandemic to an obscene figure of €50 billion. Now, we know we're not getting the full, what we should be getting back in tax on that. But if you take the method that Oxfam advocate, what they say is if you allow for an exemption of up to €4 million, which I think is way too high. But even, I use that figure to show how modest their report is, that if we take that exemption rate, that after that we could introduce a serious wealth tax that would bring us in the money that we need to deal with the various crises we face. Thank you, and what I will also say is that it is expected to top 1% of taxpayers who are those with an annual income in excess of €200,000. So 1% of Irish people have an income above that and will have paid 25% of total income tax in USC last year. This is a very large proportion of our total income tax from that 1%. In comparison, it is estimated that 75% of taxpayers and those with an income of less than €50,000 will have paid 18% of the total income tax last year. They are the most recent figures that have available. So the Deputy will be aware that the Commission of Taxation and Welfare was established in June 2021, which is currently carrying out its work. And wealth taxes, along with any other forms of taxation, could fall within this review. But the Commission is undertaking an independent review. It would not be appropriate for the Minister or myself on his behalf to speculate further about the specifics of the working contents of that report, which will be published as soon as practical. So there is a Commission on Taxation currently sitting, but we cannot suggest to them what they would do. And what I will say is that generally taxpayers in Ireland at the €100,000 bracket generally are paying 40% of their income in income tax. So we are, we have a more redistributive taxation system than most countries. I think if you do read the Oxfam report, when you get a chance, what they are looking at is the extreme wealth and how it has doubled, tripled and even in the US increased tenfold over the last number of years. Back in the 80s, we were told in this country there was no money and we were bust and we needed to tighten our belts. But we know since that there was plenty of it. It's just that it was held in Ansbacker accounts, in offshore tax havens, brass plate companies. We've seen the studies from the Paradise Papers and the Pannon Papers since. So we know that there were ways and still are ways of the wealthy not telling the truth about their extreme wealth. And I'm talking about the extremely wealthy. And we do have quite a number, quite a lot of millionaires and about nine billionaires in this country for a small island. That's quite staggering. So there are many ways that the paper suggests tax could be taken from the wealthy. First of all, not to have them self-reporting would be a start to actually have somebody go and delve down into the wealth that they have. And not to give this obscure way of hiding their wealth, but to be forced to show it. And a lot of wealthy companies and people say, oh, sure, we can't afford the tax because it's all in shares. They also suggest that you could take the tax in kind and take the shares on board. And in that, we work out that it could yield about four billion in this country. We would do a lot to provide free public transport, double the number of buses on the road, give free childcare to every family in the country. There's a lot could be done with that to address the multiple crises we face. And thank you. And I understand there are a small handful of wealthy people. Personally, I don't know any of them or I don't know where they live. I haven't encountered them. And I do take your point. But in relation to if they are tax resident in Ireland, they're covered for all taxation in Ireland. And as I have indicated, a very small percentage of the Irish taxpayers, I said 1% of Irish taxpayers, are paying 25% of all income tax. And then we have a similar pattern of our corporation tax. It's a small handful of major companies are paying the vast, vast bulk of it. So to that extent, we do collect tax from, whether it's wealth tax or income tax, from the very profitable wealthy organisations. The other point I do want to make is that I did give an example of how it is progressive here in Ireland and what we have done in relation to wealth tax. And the top three forms of wealth in Ireland, as I said, are people's houses. The value of the housing stock in Ireland is the biggest significant part of wealth. The second biggest significant part of wealth in Ireland would be the farmland. People who farm the land is valuable, but it's their working asset for the next generation, not just in. And the third form of wealth, which I would be very concerned if we start taxing people, is people's pension funds. That's the biggest form of wealth. People invest to make sure when they're retired they're not dependent on the state and to have a pension fund built up over the years. And some of that is in shares and it would be horrified if we were to start attacking people's pension funds in thinking we're getting solely at the wealthy. Because most people need those pension funds and they've put into it on the basis that we'll be able to draw it down. Thank you, Minister. Deca. I'm a Soviet minister to keep referring to people's homes, to farms and to pensions. What we're talking about here is an obscene level of wealth that isn't properly taxed. And that is what the Oxfam report points out. The wealthiest in the globe have seen their wealth jump by an obscene $4.35 trillion over the course of the pandemic. The quote from the report is that globally billionaires have had a terrific pandemic. And of course the investment in all of the industries leading from that we'd have been able to see. Sorry? I think that's your question. Finished, Marge? The clock says I have 30 seconds. That's for the next question. We've actually... We've completed your question. Oh. Deputy Clare's time. Sorry, Deputy. Okay, I'm sorry about that. Deputy Clare.