Dáil Éireann Debate, Thursday - 4 July 2024
110. Deputy Richard Boyd Barrett asked the Minister for Finance whether in the forthcoming budget he will consider introducing a millionaires' tax on the wealthiest 5% of households, whose average wealth is in excess €4 million each, excluding family homes as progressive replacement for the local property tax; and if he will make a statement on the matter. [28564/24]
Amharc ar fhreagraThe Local Property Tax (LPT) was introduced in 2013 to provide a stable and sustainable funding base for local authorities and is a significant base-broadening measure. LPT has yielded over €5 billion since its introduction, with a yield of over €550 million for 2023.
LPT broadens the tax base and reduces the level of central funding required by local government, freeing up resources for expenditure in other areas. LPT is an essential source of funding for local authorities, accounting for approximately 7% of current income.
All property owners benefit from the essential local services LPT helps to fund. The proper functioning of these services benefit every community and household. Therefore, it is equitable that the cost of providing the services should be shared as broadly across property owners as possible.
In relation to replacing LPT with a tax on high-wealth households, the taxation of property through a recurring annual tax is less economically distortionary than tax imposed on either income or capital. The LPT provides a stable source of funding which is fair and progressive with the owners of the most valuable properties paying most. The tax is equitable, has reference to ability to pay, conforms to international norms and significantly broadens the domestic tax base.
For the reasons outlined, I do not plan to replace the LPT with a tax along the lines suggested by the Deputy.
It should also be noted that there are already a number of wealth taxes in place in Ireland, including the aforementioned Local Property Tax, Capital Gains Tax (CGT), and Capital Acquisitions Tax (CAT). Certain forms of Stamp Duty also act as taxes on wealth charged in a number of ways, including on the acquisition of shares, stocks and marketable securities of Irish registered companies, and on the acquisition of property both residential and non-residential.
In total, the net receipts from these forms of tax came to just under €4.2 billion in 2023.
A 2022 report from Commission on Taxation & Welfare identified challenges that would impede the implementation of a specific wealth tax. They found that a new tax on net wealth should not be introduced without in the first instance attempting to substantially amend Ireland’s existing taxes on capital and wealth. Rather than introducing a specific tax on wealth, the Commission maintains that it would be more effective to re-examine the primary existing forms of wealth tax, CGT and CAT. These are taxes on wealth that have well-established, but distinct, bases and are well-understood in their operation.
The Government has also taken action against inequality through our tax and welfare system. The strong redistributive role of the Irish tax and welfare system is evident in the range of supports that were introduced to help mitigate the impact of the Covid-19 pandemic and in the series of measures designed to limit the impact of the current cost of living pressures. Our redistributive tax system has been acknowledged by the IMF, the OECD and the ESRI.
Ireland has one of the most progressive systems of taxes and social transfers of any EU or OECD country. The current structure of the income tax system operates as an effective means of income redistribution, helping to reduce the comparatively high levels of market income inequality to around the EU average.
It is projected that the top one per cent of taxpayer units, who are those with annual income in excess of €290,000, will pay just over 24 per cent of total Income Tax and USC in 2024. This is a very large proportion of the total Income Tax and USC take from such a small cohort of taxpayers. In comparison, 80 per cent of taxpayer units, which is the cohort of income earners with annual income of less than €69,500 and account for about 2.74 million taxpayer units, will pay 21 per cent of total Income Tax and USC.
Therefore, I do not have immediate plans to introduce another wealth tax in addition to those set out above. However, as with all areas of tax policy, the taxation of wealth, will be kept under review throughout the annual budgetary process.
