Financial Resolutions, 1978: Financial Statement, Budget, 1978. - Wealth tax
When the wealth tax legislation came before this House in 1975 it was opposed by the present Government basically on the grounds that it was detrimental to the economic interests of the country at its present stage of development. I see no reason to change that view. There were indications of an outflow of badly needed private funds in 1975 and 1976 and, while one cannot be definite about the reasons for the outflow, it seems to be more than coincidence that it occurred at the same time as wealth tax was introduced. This, of course, is only one side of the coin. The other side is the amount of capital which would have flowed into the country were it not inhibited from doing so by the very aura of a wealth tax. The amount involved can only be conjectural but, taking both sides of the coin together, one certain result emerged: existing jobs were lost and jobs in prospect never came to fruition. The wealth tax has undoubtedly created a psychological climate in which investment and risk-taking have been at a decided discount. Among other demoralising side-effects is the discrimination against Irish business. I have decided for these reasons to abolish wealth tax with effect from 5 April next.
The cost in the present year is estimated at £8.5 million. If my hopes about the effects on entreprise of the abolition of wealth tax are realised, the small size alone of this figure will give the lie to any critic who might suggest that this Budget favours the wealthy. It is insignificant in comparison with the hundreds of millions of pounds of new job-directed expenditure allocations and the across-the-board tax concessions I am providing for today.