When the late Brian Lenihan announced details of the domicile levy at the height of the economic crash in 2009, it was believed that hundreds of Irish-based multi-millionaires who paid less than €200,000 tax in a year would be affected. It hasn't worked out like that. The levy was collected from 11 individuals last year, down from a high point of 31 in 2010.
The special charge was designed to reassure the public that the pain being inflicted through wage and pension cuts and other austerity measures was being felt across the board. “We must ensure that every wealthy Irish domiciliary who pays little or no income tax makes a contribution to the State, especially during times of economic and fiscal difficulty,” the Finance Minister declared. The levy of €200,000 applied to those with worldwide incomes of more than €1m and Irish property worth more than €5m. Two years later, a loophole used by individuals who renounced their Irish citizenship was closed.
Nobody likes paying tax. Some wealthy individuals have a particular aversion to this legal requirement. Expert advisers are employed at significant cost in efforts to avoid their civic obligations. The late minister implicitly acknowledged this and quoted “times of economic and fiscal difficulty” to justify his introduction of the levy.
Concern over the low level of compliance caused the Revenue Commissioners to examine about 100 cases of suspected non-payment in late 2014. Individuals were challenged over non-submission of returns and reporting of incorrect earnings.
As a result of this exercise, the number of wealthy individuals paying the levy is expected to rise for 2015 and earlier years. That, you would think, is a positive development. But questions are being asked about whether the returns on the resources being employed by Revenue justify their actions. In this instance, the primary concern should be to ensure tax compliance across all sections of society, in good times and in bad. Surging government revenues should not influence that position.