It’s time to make the super-rich pay their fair share

IN March, Finance Minister Brian Lenihan stated in the Dáil that the full cost of bailing out Anglo Irish Bank would require €22 billion from the state. All indications now suggest that much more will be required.

Last June, Mr Lenihan revealed that €58 bn in long-term bank debt and €16.4bn in short-term debt fall due to be repaid before next October.

The national debt is increasing rapidly and the cost of government borrowing is increasing as a result.

An article in the New York Times on May 21, which was co-authored by Simon Johnson, the former chief economist at the IMF, claimed that renewal of the blanket guarantee of bank borrowings and a continuation of current government policies could even lead to a catastrophe.

The main taxation proposal being mooted by government for the next budget is an extension of tax to the lower paid. This is to be accompanied by draconian reductions in the provision of health, education and other services required by the population generally and particularly by the poor.

Government cuts and impositions on the poor who spend all their income in Ireland will flatten the economy and increase the disastrous levels of unemployment and emigration.

Simon Johnson, in his article, says it will not work and will probably lead to a downward spiral of the economy leading to an even greater crisis. Much of the €90bn irresponsibly borrowed abroad by Irish banks since 2003 is still in possession of the super-rich. For example, €400m was actually transferred to the sellers of the Glass Bottle site in Ringsend.

The borrowings which have bankrupted many developers have been transferred to others. The repayments on these borrowings are now being made by the citizens generally. Surely this money must be restored to the state as a priority.

The only way to recover this money is through an assets tax which is common in several countries and several states in the US. If the €320bn in assets (Wealth of the Nation, 2007) held by the top 5% in 2007 has now shrunk to €250bn (estimate of the trade union Unite), a 10% emergency assets tax for one year on assets would bring in 25bn and a 2% annual assets tax on the top 5% of asset-holders would bring in €5bn per year.

Raising the tax on the top 6% who earn more than €100,000 from 27% to 32%, would raise a further €1.5bn per year. The super-rich would still be very rich.

A significant increase in income and assets taxes on the rich is no longer merely desirable in equity, it is a necessity in order to rescue the economy. There is a real economic emergency. Surely the super-rich should make an emergency contribution.

Paddy Healy

Former President, TUI

Griffith Court

Fairview

Dublin 3