The truth about Ireland’s super-rich

Albert Einstein once defined insanity as doing the same thing over and over again and expecting different results each time. In the last three years successive budgets have resulted in €20 billion being taken out of the Irish economy through austerity and have drastically worsened the present economic crisis.

Even the IMF has been forced to acknowledge the adverse affect of austerity along with pro-capitalist commentators such as Nouriel Roubini. The former has said that a 1% reduction in budget deficits through cutbacks will lead to a 0.5% fall in economic growth. Yet the Fine Gael/Labour government are determined to implement cutbacks worth at minimum of €3.8 billion in the upcoming budget in December.

Of course there is a method to the present government’s insanity. They, like their predecessors in Fianna Fail, accept and support the logic of the capitalist market which means a small tiny minority amassing enormous sums of wealth and profits at our expense. Austerity is a real choice that has been made to hammer the living standards of working people so that billionaire bondholders can be paid off and the super rich and big business can enjoy low taxes and tax reliefs worth billions.

Contrary to the barrage of propaganda cutbacks are not an inevitability arising from the fact that Ireland is broke. The richest 300 people in Ireland alone have a combined wealth of €57 billion, an increase of €6.7 billion in the last year. A simple act of introducing an emergency wealth tax of 10% would raise €5.7 billion, more than one and a half times the amount of austerity that which is to be introduced in next month’s budget.

A recent study by Merrill Lynch found that the number of “high net worth individuals” in Ireland, those who have investable assets of more than €750 thousand, stood at 19,000 in 2010. In 2009 this figure stood at 18,100. Yet despite this increase investment by the private sector and super wealthy in the economy is continuing to fall. This combined with mass unemployment is the real reason why there is no economic growth within the economy.

The tax reliefs and subsidies that benefit the super rich and big business are the most blatant example of whose class interests successive governments in Ireland have served. According to Dr. Michael Collins, an economist and former member of the commission of taxation, €11 billion is spent on these expenditures each year the majority of which benefit the “golden circle” of Irish society. In fact 80% of the tax reliefs on pensions go towards the top 20% of earners.

Even those tax expenditures that are supposedly for the benefit of ordinary people are indirect subsidies by the state to the rich such as the tax relief for rent paid to private landlords, rent that is paid at exorbitant rates. The state could end the reliance of these landlords through renting out the vast number of housing units it has at its disposal with cheaper rents which could earn revenue for the exchequer.

Abolish welfare for the super-rich

A staggering €500 million is given annually to those whose pension contributions our above €40,000 per annum. Meanwhile as part of the EU/IMF deal the pensions of public sector workers has been used to bail out bondholders and the banks. The Socialist Party demands that this “welfare for the super rich” be abolished.

The sacking of 950 workers in Aviva is yet another cruel example of why the private sector cannot be relied upon to invest and create jobs within the economy. Yet this is the reason that is used to justify companies such as Aviva enjoying one of the lowest corporate tax rates in Europe of 12.5% on their profits each year.

Last year big business in Ireland made profits of €30 billion, every 1% increase on their profits would raise €300 million for the exchequer. If Ireland were to set its corporate tax rate at the same level as Austria, which has a low rate of 25% by European standards, this could raise €3.75 billion thus scrapping the need for any cutbacks in next month’s budget.

“There is no alternative” was Thatcher’s blunt message to the working class in Britain in 1980s when her policies resulted in mass unemployment, privatisation and the dismantling of the welfare state. The capitalist establishment in Ireland and Europe are repeating this mantra as part of the class war that they are waging on the working class.

There is an alternative to austerity, unemployment and falling living standards. It is just that it means challenging the tiny minority who own and control the vast resources of the economy. We need to build a new party that will fight for a government based on the interests of working class people based on socialist policies. Such a government could break the dictatorship of big business and the markets and ensure that the resources are utilised for human need,­­ not for the greed of the “1%”.