Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael) | Oireachtas source

This proposed recommendation seeks the preparation of a report on the revenue that might be raised from and the distributional impact of a wealth tax of 2% on all households with assets over €20 million within six months of the passing of the Bill into law.

As Senators from all sides of the House are aware, wealth can be and is taxed in a variety of ways. Many such taxes are already levied here in Ireland. They include capital gains tax and capital acquisitions tax, which are taxes on wealth, in that they are paid by an individual or company on the disposal or the acquisition of an asset through gift or inheritance. There is also deposit interest retention tax, which is currently charged at 33%, with limited exemptions, on interest earned on deposit accounts. There is also local property tax, which is a tax based on the market value of residential properties. Another is stamp duty, which is charged on the transfer of shares, stocks or marketable securities of Irish-registered companies as well as on the purchase of property, both residential and non-residential.

It follows that any revenue raised from a wealth tax, no matter what form it takes, may not be additional to the existing forms of wealth taxation as revenues from those taxes could be affected by the introduction of a wealth tax. The tax would not necessarily be additive.

In examining this topic, the Commission on Taxation and Welfare, which reported in 2022, identified challenges that would impede the implementation of such a tax. It concluded that a new tax on net wealth should not be introduced without first attempting to amend Ireland's existing taxes on capital and wealth. As an alternative to introducing a new tax on wealth, the commission believes that the more productive route is to continually assess CGT and CAT. Those are, as I have already noted, existing taxes on wealth that have well-established but distinct bases and are well understood in their operation.

In addition to wealth taxes, the Government takes action against inequality through our tax and welfare system. That is really important. 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, notwithstanding the broader transfers that are made through our social protection system. Ireland has one of the most progressive systems of taxes and social transfers of any EU or OECD country. That contributes to the redistribution of income and to the reduction of income inequality, even at a time of rising incomes. That is a really important underlying economic condition.

By way of example, in 2024 it is projected that the top 1% of taxpayer units, who are those with annual income of in excess of €290,000, will pay just over 24% of total income tax and USC. That is a very large proportion of the total income tax and USC from such a small cohort of taxpayers. In comparison, 80% of taxpayer units, which is the cohort of income earners who have annual income of less than €69,500 and account for about 2.74 million taxpayer units, will pay only 21% of total income tax and USC. To further demonstrate the high amount of tax being paid by high earners under the current income tax and USC system, in 2024 it is expected that there will be approximately 3.425 million taxpayer units, including married couples under joint assessment, and total yield from income tax and USC is projected to be €34.3 billion. Of that yield, approximately €7.372 billion will be paid in total by approximately 2.7 million taxpayer units with incomes of under €69,500 per annum. The remaining yield, over €26.9 billion, will be paid by fewer than 682,300 taxpayer units earning over €69,500.

I assure Senators not only that we have a very strongly redistributive system and a strongly progressive tax system but also that all taxes and potential taxation options are kept under constant consideration. The commission on taxation produced an analytic report on taxation in this State, and it remains a priority of this Government and of mine to make sure Ireland maintains the progressive taxation system we have developed over time. I do not see the additional benefit that may be gained from a report of this nature at this time. I cannot therefore accept the recommendation.