Ruth Coppinger
Question:206. Deputy Ruth Coppinger asked the Minister for Finance the estimated amount that could be raised by imposing a 5% wealth tax on the top 1% wealthiest households. [34515/17]
View answerThursday, 13 July 2017
Questions (206, 207, 208)
Ruth Coppinger
Question:207. Deputy Ruth Coppinger asked the Minister for Finance the estimated amount that could be raised by imposing a 2% wealth tax on the top 5% wealthiest households; and if he will make a statement on the matter. [34516/17]
View answerRuth Coppinger
Question:208. Deputy Ruth Coppinger asked the Minister for Finance the estimated amount that could be raised by imposing a 2% millionaire's tax on net assets exceeding €1 million. [34517/17]
View answerWritten answers
I propose to take Questions Nos. 206 to 208, inclusive, together.
In order to estimate the potential revenue from a wealth tax, it is necessary to identify the wealth held by individuals. As there is currently no such wealth tax in operation in Ireland, the Department understands that the Revenue Commissioners have no basis or requirement to compile the data needed to produce estimates in relation to a potential wealth tax. Although an individual's assets and liabilities are declared to the Revenue in a number of specific circumstances (for example, after a death), this information is not a complete measure of assets and liabilities in the State, nor is it recorded in a manner that would allow analysis of the implications of an overarching wealth based tax.
However, in 2013 the Central Statistics Office conducted the first comprehensive survey of household wealth in Ireland (the Household Finance and Consumption Survey (HFCS)). The survey provides information on the ownership and values of different types of assets and liabilities along with more general information on income, employment and household composition. During 2016, my Department, jointly with the Economic and Social Research Institute (ESRI), conducted a research project into the distribution of wealth in Ireland and the potential implications of a wealth tax using the HFCS. The research formed part of an on-going joint-research programme with the ESRI on the Macro-Economy and Taxation. The research paper, available on the ESRI website (https://www.esri.ie/publications/scenarios-and-distributional-implications-of-a-household-wealth-tax-in-ireland/), presented results on the composition of wealth across both the wealth and income distributions in Ireland. A number of wealth tax scenarios were then applied to the Irish data (wealth tax regimes from other jurisdictions and hypothetical scenarios). In each case, the associated tax bases and revenue yields, the number of liable households across the income distribution, and the characteristics of the households affected are outlined.
The joint research paper noted that the revenue that could potentially be raised from any net wealth tax would depend crucially on the assets included and excluded from the base (e.g. household main residence, farms, businesses and pensions) and the threshold amount before which liability is incurred and the tax rate. As such, the 2% and 5% rates cannot simply be multiplied by the net assets held by the categories of household specified by the Deputy.
The wealth tax scenario in the joint research paper that is closest to the various wealth tax arrangements outlined by the Deputy in her questions is the high threshold-no exemptions scenario as outlined in Table 5 of the Department of Finance/ESRI study. This scenario has a personal threshold of €1.0 million (doubled if married and a €250,000 increase per child) and applies a 1% tax on net assets. Given it is not identical to the scenarios outlined in the Deputy's question, care should be taken in interpreting the revenue estimates. This scenario, given the distribution of household wealth in Ireland in 2013, is estimated to raise €248 million as outlined in Table 8 of the Department of Finance/ESRI study. The research notes that its tax revenue estimates are static; in other words, no behavioural response to the tax is modelled. The estimate of €248 million, therefore, is likely to be an upper estimate of the revenue that could be raised.
In order to estimate the yield from a tax with precise parameters, it would be necessary to seek the agreement of the CSO to revisit its original survey data for this specified purpose. This would be a significant undertaking that would take considerable time and resources to complete.