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Column: Rich people can afford to give more - so a tax on wealth makes sense

The top 1 per cent of earners in this country own roughly €130 billion – so it’s time for the government to bring in a wealth tax, says Siobhán O’Donoghue.

Siobhán O'Donoghue

IRELAND IS NOW several years into this economic crisis and all the evidence shows that the wealthy have not been asked to play their part in any real substantial way. Merryl Lynch tell us that the number of millionaires has increased not decreased, and there has been an even greater concentration of wealth towards the top end.

The League of Credit Unions recently reported that 25 per cent of people  have just €70 left after paying essential bills each month.  This amounts to less than €3 per day and is the difference between survival and going over the edge. The public services that we rely on to educate our children, care for our sick and maintain our public amenities and infrastructure is stretched to breaking point at a time when they are needed more than ever.

Michael Taft in his political commentary blog provides CSO data that shows that the top 1 per cent of earners in Ireland is made up of approximately 36,000 adults –  and that this group owns approximately €130.2 billion. This is echoed by information from the Global Wealth Database 2011 from Credit Suisse which showed  the top 10 per cent own 58.9 per cent of net wealth.

Claiming Our Future has outlined a menu of proposals to generate badly needed revenue to protect mid to low incomes, minimise cuts to public services and create jobs. These include a) a levy on assets and property worth over €1 million b) high net worth Irish citizens paying their dues here so that the number of tax exiles decreases c) eliminating tax breaks for those with high incomes so that they pay their fair share d) a levy on financial transactions over significant amounts (known as a Tobin tax) and  e) a higher tax rate on incomes over €100,000.

The revenue to be generated from a wealth tax on assets worth over €1 million could generate between €500 and €600 million alone per annum. Tax expendidures in the main benefit the highest paid.  80 per cent of pension reliefs go to the top 20 per cent of earners.  Property-related tax expenditures also disporportionally benefit the most well off.  Tax expenditures like these effectively mean average and low earners subsidise high earners.  Changes in tax expenditures in the area of pensions and property related reliefs could save the exchequer in the region of €1billion.

Calls to buy Irish or buy local mean little when the very disposable income required to purchase goods has disappeared in increased charges, or doesn’t even stretch to buying the essentials.  If this government wanted to seriously help the economy get off its knees it would not be considering grossly regressive proposals such as VAT increases which clearly damages consumption, hurts business and pushes low income households even further into poverty.  Those with low incomes pay approximatly 16 per cent of their income in VAT while the top bracket pay on average only 6 per cent.

Social Justice Irelands in their 2011 Social and Economic Review state that the top 10 per cent’s disposable weekly income is €2,276 – while the bottom decile recieves a mere €210 per week.  It beggers belief why a Minister for Finance who is desperate to generate vital revenue is seemingly considering targeting those already living and increasingly working in poverty while cosseting those with weekly disposable incomes that are larger than most workers monthly salaries.

That more equal societies do better on almost every level reinforces the argument that it is in the wealthy’s self interest to contribute a greater share of their resources for the common good. Countries with the highest levels of productivity, competitiveness, health and social solidarity are also countries with highest levels of taxation and the lowest levels of income inequality.

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There is still time for this government to decide on a budget that is in the interest of the majority not a powerful minority elite. Embracing austerity, so strenously advoacated by those who will never be impacted by its disasterous consequences, is a fools game.  Put simply, it is not working.

In spite of the IMF/ECB plan the government retains the power to make political decisions on issues like taxation.  There are alternatives to the savage budget spinning in the airwaves. Taxing wealth is one of the most logical and least damaging option.  What is not clear is why those in government with a social conscience appear to be turning the other cheek.

If you want to demonstrate your support for Claiming Our Futures proposals on taxing wealth and send a strong message to our government please sign our petition at www.claimingourfuture.ie

Siobhán O’ Donoghue works with the Migrant Rights Centre Ireland and is a spokesperson for the Tax Wealth Campaign with Claiming our Future. Claiming our Future is a national social movement concerned with equality and sustainability.

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