Dr. Bert Brys:

I cannot remember exactly in respect of Chile, but in Colombia, they had a temporary tax that has been prolonged over time and they will now make that permanent. However, it is as Ms Perret said. One has to see that wealth tax also in relation to the other taxes on capital that already are in place. The Colombian or Chilean setting is a different setting from Ireland. There is much to say. It is not necessarily that we in the OECD are against wealth taxes; we just highlight the advantages and disadvantages and what the experiences are in countries.

As Ms Perret said, it poses many base challenges. Making sure there is a broad base is not easy. Just to repeat a bit perhaps and I am sorry for that, but as Ms Perret said, we are dealing with many people who have their wealth in pensions and land. It is all not that straightforward to include that type of wealth also in the wealth base. Given the design of Ireland’s capital income tax system and also some of the interesting propositions made in the report, which goes into the direction of strengthening the capital income tax system, I want the committee to keep in mind that if a wealth tax is added on top of that, Ireland might end up with a very high effective tax rates on certain types of capital income. On that, we typically give the example that a wealth tax is similar in nature to a proportional tax rate on a presumed and imputed type of income. Therefore, the committee can turn the thinking on a wealth tax into a type of income tax. Let us say a 1% wealth tax is equal to a 25% income tax - a proportional tax on an imputed presumed 4% return on that wealth. When thinking about overall tax burdens, that 1% wealth tax or 25% on 4% imputed comes on top of the dividend taxes and capital gains taxes that Ireland already levies and would end up in very high effective tax rates.