Doughnut approach has hole in middle

SINN Fein’s game plan is clever and clear-cut. It is a doughnut approach to policy and economics.

On the outlying issues it stuffed its manifesto with figures and details. Its finance spokesman, Pearse Doherty, can point to a number of areas where it would find money and make a tangible difference.

But even if these sections are sugar-coated, layered with wads of cash and packed with all of your favourite things there is still a big hole in the middle to fill.

At an optimistic estimate the money it can earmark is not enough to turn the doughnut into a tasty bun.

Sinn Féin, like Fianna Fáil, is in the enviable position of knowing it will not be in Government once the new Dáil votes for a Taoiseach on March 9.

It can make promises that do not need to be fulfilled.

But when the party describes its plan as a fair tax system it could be better labelled as an airy fairy tax system.

Its tactics are concentrated on tapping those who have money, or who at least enjoyed the trappings during the Celtic Tiger.

It hopes to bring in €120m on an increased second homes tax, it wants to find €285m on abolishing mortgage interest relief for landlords and €96m on raised capital gains tax. These appear to be realistic targets.

But the more precise measures on the outside of the tax base can only bring in so much. They are not enough to deal with that bit in the middle.

There is promise of a wealth tax of 1% tax on incomes raised among those with assets in excess of €1m. This would be expected to generate €1bn.

Sinn Féin wants to standardise a whole host of tax reliefs. This accounts of €1.1bn of its recovery plan. That is a big €2.1bn hole in a promise to generate €4.7bn in a full year.

Mr Doherty carefully argued that it had asked for figures but was not supplied them by the Department of Finance.

So it took its best estimate.

Conveniently, its calculation was enough to explain how the doughnut can be packed out if it got into power.

But while this might buy some votes among key demographics it is unlikely to pay the bills.

The wealth tax would not be unique. Other European countries have had one

But the difficulty in arriving at an exact figure is underlined by the fact that when Sinn Féin first proposed this in 2009 it promised the same 1% wealth tax could yield €1.6bn.

Yet even taking the new lower sum it is hard to see how such a large amount could be raised in an economy the size of Ireland.

In France more than 560,000 people pay the tax and it results in a haul of €3.3bn.

This hits family incomes above €750,000 with incremental rises depending on the value of assets.

France wants to abolish this because it can drive money out of the country and encourage evasion.

However, Sinn Féin said in a fair tax economy those on the lowest wages and social welfare should not suffer to make life easier for the well off.

That is an ideological issue. The mathematical ones are not as straightforward.

The effects of the recession have limited the ability to raise large amount from previously rich people.

This will handicap the party’s hopes of taking in €410m a year from taxing individual incomes over €100,000 at a rate of 48%.

On the eve of the recession 116,000 Irish people were earning in excess of €100,000 and 24,000 of those took home €250,000. The majority of the highest incomes were unsurprisingly in the property sector and in unspecified investment businesses.

Neither are likely to sustain the same level of wealth as they once did.

The plus-€100,000 brigade together paid €5.6bn in tax during the boom, but two new taxes targeted at the upper end of their incomes would be very fortunate to raise anything like the €1.4bn Sinn Féin requires.

However, Sinn Féin is aware of the fact it does not need to balance the books, it just needs to win seats.

So whether it bakes a doughnut, a bun or a cake matters a lot less than increasing its Dáil representation on a populist left-wing platform.

And on that score it remains on course for sweet success.