Fifth of taxpayers favour social welfare cut to pay for Covid-19

A 'wealth tax' was the most popular method of raising funds for the Exchequer, new survey finds

Just 40% of taxpayers would be happy to pay higher taxes to pay, in part, for the cost of COVID-19.

Six-out-of-10 taxpayers would favour cuts to public spending over increased taxes, according to a new survey by Taxback.com.

The tax refund specialists surveyed over 2,100 taxpayers nationwide and found just 40% of taxpayers would be happy to pay higher taxes to pay, in part, for the cost of Covid-19, while 60% said they’d rather cuts in public spending.

A fifth of taxpayers would favour cuts to social welfare.

Consumer Tax Manager, Marian Ryan said the survey findings were "striking."

"More people are in favour of cuts to public spending (60%) than increased taxes (40%) and these people may well be satisfied with the announcement on October 13th. But opting for cuts to spending brings with its own, often less immediately felt or noticed, repercussions," she said.

"Little or no-one wants to see a tax on people’s savings (5%); nor do they want a tax on pension funds (3%), an upward review of LPT (3%), motor tax increases (2%), or an increase in Stamp Duty on homes (1%). Whether these options are the most favoured, or simply the least unfavoured is unclear."

"Obviously, we’d all much rather be facing into a giveaway Budget on the back of a strong economic outlook, but this is not the reality in which we find ourselves.”

Wealth Tax

The most popular method of raising funds for the Exchequer amongst taxpayers surveyed would be a ‘wealth tax’ (46%).

Ms Ryan said this was "perhaps an unsurprising response" given that statistics from economist David McWilliams show wealth is highly concentrated in Ireland with 73% of the country’s wealth being owned by the most affluent 20%. 

"It stands to reason that the majority of people would favour this option as it will not affect them," she said.

"The trouble with a wealth tax is how to decide on a threshold — what factors make up someone’s wealth? Introducing a wealth tax has been mooted for years – with certain political entities loudly voicing their support, while other contributors have suggested it could actually have negative repercussions on Ireland’s ability to attract FDI and talent."

Taxback.com say a wealth tax is a consistently firm public favourite in terms of ways in which the Government could raise money for the Exchequer. 

In 2018, the company conducted a survey in which 65% of respondents agreed that a new tax on accumulated wealth should be imposed and when the same question was asked in 2017, 87% were in favour of the tax. 

In 2019, 52% of respondents said if the Government had to tighten the purse strings, they would support a wealth tax to do this.

Ms Ryan said a wealth tax can be seen as an "easy win", but it could have "the unintended consequences of removing money from our economy if we lessen the disposable income of the wealthy."