SF’s proposed wealth tax will hinder Ireland’s economic recovery – Donohoe

19th November, 2012

Capital being moved abroad will put pressure on the banks, costing households and businesses dearly


The introduction of a wealth tax, which Sinn Féin’s is expected to propose in the Party’s pre-Budget submission tomorrow, will dramatically hamper Ireland’s economic recovery, according to Fine Gael Dublin Central Deputy, Paschal Donohoe.

“Sinn Féin plans to raise €800 million through the introduction of a wealth tax which would impose a one per cent levy on net assets, including savings, in excess of €1 million. What Sinn Féin fails to acknowledge, however, is that wealth is mobile and that any attempt to introduce a tax of this nature will cause money to be moved overseas in an attempt to avoid payment.

“Sinn Féin also seems to be forgetting that the savings that are deposited in our banks by the more affluent members of society is the same money that is loaned to our SMEs and to Irish families. The bottom line is that a wealth tax which would lead to a flight of bank deposits would mean reduced lending for local businesses, as well as Irish households.

“Recent figures have suggested that the number of Ireland’s super-rich who have moved abroad since the recession began has almost trebled as people seek new ways to avoid paying higher taxes. The introduction of a wealth tax would undoubtedly exacerbate this situation, putting additional pressure on the banks and, in turn, domestic and business lending.

“SMEs are the lifeblood of the Irish economy and supporting them is crucial to getting the country back on track. This Government has put a number of measures in place through the Action Plan for Jobs to ensure that the right environment is created which will allow start-ups to develop and established businesses to grow to create the jobs we so badly need.

“The Government is keeping a close eye on the banks to ensure that lending targets that have been set down are being met. The Credit Review Office is also assessing loan refusals, with 60% of decisions being overturned. A wealth tax would result in a considerable depletion of bank deposits that are currently used to facilitate business and household loans. Is Sinn Féin suggesting that the Irish taxpayer should stump up more money to further bolster the banks in the event of this happening?

“In many other countries wealth taxes have been found to be both unworkable and unfair, with the result that many have reversed or dramatically scaled back the tax. There are now just two countries in the Eurozone who impose a wealth tax. Last year the rate of tax that was levied in France on wealth above €1.3 million was reduced from 1.8% down to 0.5%.

“We are making steady progress in terms of our economic recovery having returned to growth last year following four years of decline. Sinn Féin is venturing further into the realm of auction politics than ever before. In its attempts to purchase votes through a policy that would be the envy of Cuba, and that no other modern European State is introducing, Ireland’s economic recovery would be seriously derailed with Irish families and businesses ultimately being the ones to lose out.”