The latest data from the Central Bank of Ireland's Quarterly Financial Accounts show that the net wealth of Irish households increased by €33.2 billion in the quarter to reach a high of €1,113 billion in Q4 2023. These data show that the majority of household wealth is held in the form of households’ main residence, with the main driver of recent increases being positive revaluations on existing housing assets along with investment in new housing. While this official data provides an overview of the aggregate picture, it does not capture distribution effects.
However, new experimental data from the European System of Central Bank’s Distributional Wealth Accounts can provide some insight on the composition of adjusted net wealth. This is a slightly different concept to net wealth. It excludes inter alia currency holdings, non-life insurance reserves, occupational pensions, other accounts receivable and other accounts payable.
Overall, this experimental data show that Ireland’s net adjusted household wealth has more than doubled over the past decade, increasing from just over €490 billion in Q2 2013 to almost €1,136 billion in Q4 2023. This is reflected in adjusted wealth increases across the income distribution. Net household wealth in the bottom fifty per cent rose from just over €10 billion in Q2 2013 to almost €103 billion in Q4 2023. Household wealth held by the top decile increased from about €286 billion in Q2 2013 to €546 billion in Q4 2023. Data is not available for the top 1 per cent or top 5 per cent.
The Government is committed to creating a fairer, more equal Ireland. In this respect, Capital Gains Tax, Capital Acquisitions Tax and Local Property Tax all represent taxes on wealth. 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.
In addition to wealth taxes, the Government takes action against inequality through the broader 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.
Focusing on the tax system, those on lower incomes pay less income tax as a share of their income than those on higher incomes. The Revenue Commissioners estimate that the top 10 per cent of income earners, those earning in excess of €102,000 will pay 63.2 per cent of the total income tax and USC collected in 2024. In contrast, those earning €69,500 or less, which represents the bottom 80 per cent of income earners, will contribute 21 per cent.
In regard to the request for the estimated revenue that would be generated by levying a tax of 2% on the top 5%, and any potential tax free allowances, the Department of Finance has opened its pre-budget costings service. This is available with effect from 1 July 2024. The procedures for availing of this service are set out in a letter dated 1 July 2024 from the Secretary General of the Department to all recognised parties and technical groups in Dáil Éireann. To ensure efficiency and fairness all costing requests should be made in this manner, via the standard request format template, instead of the Parliamentary Question system at this time.
