Dáil Éireann Debate, Wednesday - 21 April 2021
515. Deputy Ged Nash asked the Minister for Finance his views on the recent statement by the IMF in respect of the prospect of a solidarity surcharge (details supplied) to support economic recovery globally; if he will commit to producing a well-designed system of net wealth taxes to support Ireland’s economic recovery and public investment; and if he will make a statement on the matter. [19834/21]
View answerI am aware of suggestions for a solidarity tax to be imposed on those companies that appear to have fared better during the pandemic. While I understand why some may feel this is justified, I would urge caution.
2021 will be a critical year for International Tax as we seek agreement at the OECD on addressing the tax challenges of digitalisation. I believe that we should focus on seeking a global solution which will also support research, development and innovation.
We must acknowledge the important role played by innovative sectors of the economy. The growing digitalisation of business in recent years has allowed many parts of the economy to continue to function while others were forced to close. This has enabled home working and allowed trade in essential goods and services to continue.
Furthermore, the fact that sectors of the economy have continued to function has allowed Governments to extend supports to other sectors of the economy who have fared less well particularly in areas such as hospitality and retail.
Most importantly, we should acknowledge the remarkable work of the pharmaceutical sector in rapidly developing vaccines which I believe will be key to allow us to return to our normal lives as quickly as possible.
With regard to wealth taxes, I would remind the Deputy that Ireland already taxes wealth in a variety of ways, such as our Capital Acquisitions Tax (CAT) and Capital Gains Tax (CGT) and which are levied on an individual or company on the disposal of an asset in the case of CGT, or the acquisition of an asset through gift or inheritance, in the case of CAT.
The Local Property Tax, which was introduced in 2013, is a tax based on the market value of residential properties, and can also be categorised as a form of tax on wealth.
It is also important to understand where Ireland stands in relation to the distribution of wealth. In 2013, the Central Statistics Office conducted the Household Finance and Consumption Survey (HFCS) providing the first comprehensive data on household wealth in Ireland. 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. The data indicated that wealth inequality in Ireland for 2013, as measured by the Gini Coefficient, was lower than the euro area average.
The Central Bank recently published a research report presenting results from the 2018 HFCS which highlights the improved financial position and resilience of households prior to the COVID-19 crisis.
The Central Bank's new report 'Household wealth: what is it, who has it and why it matters' shows that Irish household net wealth grew by over €76,000 for the median household between 2013 and 2018, and that wealth inequality here for 2018, as measured by the Gini Coefficient, remains lower than the euro area average It also notes that "the data highlight the improved financial position and resilience of households".
The report highlights that a significant portion of wealth for most households was tied up in the family home, and that increases in house prices (74% increase for the period) was a major factor in the reported increase in household wealth.
My officials continue to examine all issues related to taxation, including wealth taxation, on an on-going basis, and they and I will monitor and consider any additional information and data that comes to light. I do not, however, have any plans to introduce a tax measure along the lines of that sought by the Deputy at this time.
Countries will need to repair public finances once we have emerged from the pandemic. This will require us to be open to ideas and Ireland will give careful consideration to any proposals which may be helpful. However, I believe that innovation needs to be encouraged, and I remain to be convinced on taxes which target specific innovative sectors.
