Budget 2020: Constraints show wealth tax is vital

Budget 2020: Constraints show wealth tax is vital

On Tuesday, Finance Minister Paschal Donohoe introduced Budget 2020. A set piece of the political year a budget is rarely radical. Surprise is unusual though, thanks to Charlie McCreevey, not unprecedented.

The process is susceptible to international uncertainty. Our small island economy is no longer almost a kind of flotsam and jetsam struggling to make headway on the wild seas of international, tax-efficient commerce. EU membership offers us an anchor — even if that anchor is sometimes very heavy.

It is hard to imagine that, since this State was founded, there were more than two other finance ministers whose budgets were as constrained by known unknowns as Mr Donohoe’s. Seán T O’Kelly served as minister for finance all through the Second World War and Brian Lenihan served during the darkest days of the last recession.

They might have empathised with Mr Donohoe’s difficulties, even if they never had to cope with an increasingly imbalanced tax stream overly dependent on corporation tax.

Government predict corporation tax will deliver a record €12bn next year — and from a politician’s perspective, anticipated income can be spent even before it is collected. We may have come to rely on something as fickle as winter sunshine, especially as, with one Twitter flourish US president Donald Trump, might move the goalposts in a way that encourages sources of this bonanza to repatriate to America.

Despite the threat of Brexit, many responses to the budget were made as if that potential disaster was irrelevant. Social media was indifferent to the realities of our interdependent world. Lobby groups were underwhelmed by the allocation to their particular cause or need.

Despite that, the measures to resolve the housing crisis were shamefully inadequate, but this administration’s half-hearted record on this issue suggests that anyone expecting real change might still believe in the tooth fairy. That anger was even sharper when tax increases, especially carbon tax, were discussed even if services and taxes are the same thing if only expressed differently.

Maybe if that anger was redirected then real progress might be made. The coming election offers an opportunity, maybe the last one for centrists to show which side of the chasm between the very rich and the rest of us they stand on.

Ireland’s richest people increased their wealth by 10% in the last year. The combined wealth of our wealthiest 300 citizens is €87bn, multiples of the sums that are available to Mr Donohoe. To join this cohort, you need €57m, up from €52m last year. This growth, a multiple of inflation too, feeds a defining issue of our day — wealth inequality.

This surge has put wealth tax to the very top of the agenda in America’s presidential election.

Elizabeth Warren and Bernie Sanders have made taxing wealth a core policy. Those ambitions are echoed right across the world’s social democracies. It is unimaginable that our main parties have not finalised manifestos for the coming election.

Any programme that does not include proposals on a serious wealth tax is inadequate and unsupportable. They will also provoke the simplest question — why are we reluctant to have a wealth tax? What are we afraid of?

More on this topic

Reasons to be happy for your moneyReasons to be happy for your money

Cautious approach in Budget an indicator of underlying issuesCautious approach in Budget an indicator of underlying issues

Social Democrats: People on lower incomes 'will take the brunt of Brexit' after BudgetSocial Democrats: People on lower incomes 'will take the brunt of Brexit' after Budget

Budget 'disproportionally impacts welfare recipients', according to ESRIBudget 'disproportionally impacts welfare recipients', according to ESRI