Tuesday, 7 June 2011
Question 23: To ask the Minister for Finance in view of the recovery in net financial asset values by €27.3 billion in 2009 (details supplied), if he will propose that the net financial assets of households with net financial assets above €2.3 million having incomes above €100,000 per annum be taxed in budget 2012 to avoid further impositions on low and middle income households and reductions in public services; and if he will supply the actual figures for year 2010 and the estimated figures for the year 2011. [14408/11]
The Deputy appears to be suggesting the imposition of a type of wealth tax. Asset values increase and decrease over time. In the context of current economic circumstances, they have declined considerably in many cases, notwithstanding the recovery in the value of net financial assets referred to by the Deputy. If the value of an asset or of an individual's wealth is measured at a particular time there is no guarantee that the asset value or the individual's wealth will remain at that level or increase thereafter. When taken with variations in income levels it would make a tax of this nature very unpredictable.
Capital Gains Tax, CGT and Capital Acquisitions Tax, CAT are, in effect, taxes on wealth. They are levied on an individual or company when they dispose of an asset, CGT, or acquire an asset through gift or inheritance, CAT. The rate of these taxes has been increased by a quarter in recent years, from 20% to 25%. Also, the tax-free thresholds for CAT have been reduced to take account of the fall in asset values over the last number of years. The current CAT tax-free thresholds are 39% below their peak levels in early 2009. Although an individual's assets and liabilities are declared in a limited number of specific circumstances, for example, following a death, the Revenue Commissioners have informed me that they are not in a position to link an individual's income to his-her financial assets. It would, therefore, be difficult to gauge the likely return from a tax along the lines suggested. This is an important consideration, if the Deputy's proposed tax was to be regarded as an alternative to other more predictable revenue sources. For example, the tax measures outlined in the Memorandum of Understanding with the EU-ECB-IMF have a combined projected yield of €1.2 billion for 2012. It is highly unlikely that a tax along the lines suggested by the Deputy would yield anything like this amount.
While I do not propose at this time to introduce such a tax, all taxes and potential taxation measures are constantly reviewed in the context of the budget and finance Bill. I am informed by the CSO that the figures for the financial assets of households for the year 2010 will not be available until October next and it is not their practice to produce forecasts for the net financial assets of households.
The net financial assets of wealthy people increased by 27.3% between 2008 and 2009 and are likely to increase again in 2010 and 2011. These are personal rather than business, commercial, building or housing assets and are net. I believe people with such assets who are on significant incomes should pay their fair share of taxation. They are not doing so now. I believe it is time super rich Irish people who have these assets should make a considerable contribution given our current situation.
Will the Minister consider following the example of several states in the US and of France, Norway, Spain and Switzerland in imposing an assets tax such as this?
An asset tax is in effect a wealth tax. We currently have in place two wealth taxes. Normally, wealthy people are taxed when they gift some of their assets to their children or when they die and their children inherit their assets. There are two forms of tax, which run at 25%, which is considerable. Naturally, we will consider every tax coming up to budget time. So many taxes are currently being suggested and mooted. I am not suggesting the Government is considering an asset tax. The Deputy referred to the wealth tax in France, which is at 1.5%. On a pro rata basis, that kind of tax in Ireland would have a yield of €400 to €500 million per annum. However, if one is talking about it as a substitute for other taxes, one would lose more in the take on, say, income tax than one would gain on this new form of asset tax. We also have the situation of those with assets in Ireland being domiciled elsewhere, so I am not sure what the actual yield would be.
The Minister referred to those domiciled elsewhere. Surely it is time Irish taxation should be on the basis of citizenship, as it is in the United States, which is where United States citizens in Ireland are paying tax. The Minister's former colleague and former Minister, Mr. Richie Ryan, introduced an asset tax in this country. Does the Minister not believe very wealthy people should show a bit of patriotism in the situation in which we now find ourselves?
As I said, while we will consider all options, an asset tax is not one we are considering at present. Many other taxes are mooted in the memorandum of understanding, certainly enough to keep us going between now and budget time.