The latest figures from the Central Bank confirm that wealth remains tightly held in Ireland, with around 10 per cent of households holding close to half of all assets. Wealth inequality has actually declined somewhat over the last decade and is below the EU average. But the total wealth held by the top 10 per cent is still five times higher than all the assets held by the bottom 50 per cent.
Wealth has increased here over the past decade much more rapidly than the EU average. The main reasons why the lower half of the population have increased their net wealth is first, that many have paid down debt build up during the Celtic Tiger years and second that their house is worth more. For the better-off, housing and financial assets have risen in value.
Irish politics is loath to tax household wealth, leaving the Irish system heavily reliant on income and sales taxes. The family home is seen as a “no-go area” in tax terms, including by parties of the left. Even small increases in local property tax levels, already low, cause controversy. As property accounts for two thirds of total assets, this reduces the tax options, even if investment property is seen as fair game.
When it comes to other assets, views differ. Fianna Fáil and Fine Gael have concentrated on cutting inheritance tax. Labour and the Social Democrats have proposed wealth taxes, while Sinn Féin wants this option studied and supports increases in other capital taxes, including on inheritances.
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While income inequality is tackled by a highly progressive tax system in this area, taxes on wealth are low by international standards. As the Commission on Taxation pointed out in 2022, there is a strong case for higher taxes on wealth to widen the tax base, though it did not call for a specific wealth tax.
Higher taxes on wealth are only likely to be addressed if there is a public finance crisis. Otherwise any need for more cash is likely to be met by a higher take from income rather than wealth. It is always politically easier to increase existing taxes, rather than reform the system with new ones.
