Loopholes that allow “extraordinarily” wealthy people to live in Ireland but yet not pay any taxes should be ended, an economist for the Irish Congress of Trade Unions (Ictu) said today.
Paul Sweeney, who wrote Ictu's Economic Outlook 2008published today, said there was now a phenomenon where some people "arrogantly" did not pay tax at all.
“Because we are heading into pay talks, we’re looking at what’s a growing division in Ireland between income and wealth between the top and the bottom of our society,” he said.
Ictu general secretary David Begg said “huge amounts of money” were changing hands for senior posts in the private sector, particularly in share options.
“We are sensitive about that because we are being exhorted by all and sundry at the moment to be reasonable and moderate and not push unreasonable wage demands. But that doesn’t really cut much ice in circumstances where the majority of people in the country are on very modest incomes.”
He said 18 per cent of people were earning less than €10 per hour.
“We are not a high-earning society, in that sense and it’s been a bit irksome to listen to some of the blather that’s gone on about this in recent days, when you see the greed and the avarice that is now rampant in Irish society generally. Our view is, quite frankly, that there is very little by way of common bond between the people we represent and the people so described.”
Mr Sweeney said the Government had created “an enormous number of tax loopholes” so that people could live here and legitimately not pay tax.
“They have cut those, at our behest, on the bloodstock industry, starting only on August 1st this year and also on property investment.”
But new loopholes were being created, including investment opportunities for wealthy people to invest in health services, he said.
“There are opportunities not just to invest in hospitals but now in hospices for the dying. The wealthy can shelter their taxes by investing in hospices for the dying. The State is not investing in them but the rich people can.”
Mr Sweeney said governments needed to deal with the perception “that there are some people in this society who are doing extraordinarily well and who are not paying their taxes”.
“In the feudal days, the barons endowed alms houses. These people today who don’t pay their taxes, they might support a football team in voluntary taxes but they don’t pay their taxes. This is an issue and it’s one that ordinary members of trade unions are very annoyed at.”
The Ictu report says the remuneration of most Irish managers of smaller companies has risen far faster than that of the average earnings of industrial workers.
It estimates that executives at the very top of the top ‘quartile’ are paid about €1,212,000 per annum.
Quoting figures from the Irish Management Institute, Ictu says some 67 per cent of Irish chief executives were in line for a bonus of up to 30 per cent of their salary in 2006.
Managers reporting directly to the chief executive received the highest pay rises, at 9.3 per cent.
Mr Sweeney said, however, the Irish situation was “nothing like” the “obscene” situation in the US, where in some cases the pay of top executives had hit 800 times that of the average worker.
Ictu suggests ending tax subsidies for “huge salaries” for executives and that executive bonuses not be allowed to exceed between a third and a half of salary.