New Economic Plan Proposed in Ireland

November 2, 2010 Taxation in Ireland

Monopoly JusticeOne of Ireland’s leading opposition parties has released a proposal outlining several measures which it claims will aid the country’s economic recovery, including a new personal income tax bracket, reductions in wasteful public-sector spending, and greater taxation of wealthy individuals.

On November 1st Sinn Féin officially released its pre-budgetary plan, which outlines the party’s own proposals for the December national budget announcement. Sinn Féin claims that the new economic ideas stipulated in the plan could stimulate long-term growth in the economy while efficiently addressing the budget deficit. Among its many suggestions, the pre-budget plan calls to instate a third personal-income tax bracket, which will be effective on earnings in excess of EUR 100 000 and be levied at a rate of 48 percent. It is estimated that the measure would raise an additional EUR 410 million annually. A wealth-tax was also proposed, which would see all assets valued at over EUR 1 million be levied at 1 percent annually. Alterations to national discretionary tax relief schemes will also yield approximately EUR 1.1 billion annually.

Additionally, the proposal lists a series of non-taxation measures aimed at economic improvement, including a concentrated effort to minimize wasteful government spending, which could save almost EUR 1 billion before 2016. The budgetary package also includes EUR 7.6 billion of stimulus measures, which should spurn Ireland into renewed levels of economic growth.

Gerry Adams, president of Sinn Féin, admitted that his proposed budget will result in some initial “drag” on the economy. However, in the long-run the implementation of the party’s pre-budget plan would restore the country to its “Celtic Tiger” days.

Sinn Féin’s proposal was issued in anticipation to the current government coalition’s budget plans, which is scheduled for release in December. The presently ruling coalition is expected to instate over EUR 4 billion of public spending cuts in order to decrease severe national budget deficit. The Government has assured the European Union that it will lower the deficit to 3 percent of the GDP by 2014, and will not require economic assistance in the foreseeable future. However, the Sinn Féin has openly contested the rationales behind the promise and the anticipated budget plans, saying that they will ultimately lead to further economic decline in Ireland.

Photo by mtsofan