A LEVY should be imposed on those earning more than €100,000 a year to help establish a venture capital fund to invest in job creation, SIPTU president Jack O’Connor has said.
Those levied would receive a dividend on their “investment” if the fund proved successful, he suggested.
But he admitted there could be no guarantees of dividend payments — which may open the proposal to criticism that it is merely another tax in disguise.
Mr O’Connor quoted Department of Finance figures to suggest that a “tiered levy” on those earning more than €100,000 could raise an extra €1 billion a year.
Under the plan, the money would go to a state “strategic investment bank”, which is proposed in the Programme for Government but has not been set up.
Mr O’Connor proposes that the bank be set up with about €4bn-€5bn from the National Pension Reserve Fund.
Some €2bn of this would be used immediately, along with the €1bn raised from the levy, to establish a €3bn venture capital fund.
The fund would focus on investment programmes that would generate jobs.
If the fund’s investments proved successful, those levied would then receive a dividend.
“A €3bn venture capital fund would increase investment in the economy by 16% this year,” Mr O’Connor said. “The same should be done again next year and at least €2bn should be penned in for 2013.”
The SIPTU president acknowledged the argument that taxing the wealthy more heavily could see more of them leave Ireland for low-tax regimes elsewhere.
But he said this risk would be “reduced” if those affected were assured the levy would last for a limited period only.
“People on high incomes would doubtlessly complain, but they would get the money back. In any event they will lose a great deal more in a disorderly default.
“The multiplier effect of funds focussed on job generation and the savings on social benefit would be also significant. The bottom line is that there is no way out of the current mess without jobs and there will be no jobs without growth and there will be no growth without investment.”
However, Mr O’Connor admitted there were no guarantees people would receive dividends.
“You couldn’t enter into absolute guarantees, because then it would just be added to the national debt and that would play against the objective of reducing the deficit,” he told RTÉ Radio.
“Whilst you couldn’t guarantee a dividend or you couldn’t guarantee a return, if you manage a venture capital fund properly, then it’s reasonable to assume that it would generate a return.”
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