Wealth tax could raise hundreds of millions

Wednesday 25th September 2013

A wealth tax targeted at the richest 1-2% of households would be “highly equitable” and could raise hundreds of millions of euro a year, according to a new study from the TASC think tank. The report calls for the introduction of a “realistic” tax rate on households with wealth of over €1 million.

The proposed wealth tax would be additional to income tax. As well as raising money for the exchequer the study says it would be redistributive, help combat tax evasion, and could improve economic efficiency if correctly designed.

The report proposes an annual self-assessed tax on net household wealth, or gross assets less liabilities, based on residency and location of assets rather than citizenship. It says there should be few exemptions or reliefs, although it argues that pension assets and personal property worth up to €20,000 should be exempt. It also makes recommendations aimed at avoiding capital flight and high administrative costs.

The report does not recommend a rate for the tax, but it says “conservative assumptions” suggest that a 0.6% rate with a €1 million threshold could raise €150 million a year.

The TASC analysis looked at different types of wealth tax in place overseas and concludes that the introduction of a wealth tax in Ireland is entirely feasible. Its director Nat O’Connor said Spain and Iceland had introduced wealth taxes in response to the crisis.

“Norway, Switzerland, France and other countries already have various forms of wealth tax and the European Commission has considered its introduction on an EU level. The introduction of a carefully designed wealth tax could make an important contribution to broadening Ireland’s tax base, as international organisations have advised. Moreover, the tax would fall squarely on those who are in the best position to support vital public services and social protection for those who need them most,” he said.

The study was commissioned by the trade union-backed Nevin Economic Research Institute (NERI), whose director Tom Healy said it was the most significant research on wealth tax options since an ESRI study in the mid-1980s. “No options for a progressive reform of taxation should be ruled out in the current difficult fiscal climate,” he said.