Housing — not tax — is the main problem for the economy, believes the party’s finance spokesperson
On the Monday after Sinn Féin captured nearly a quarter of the vote in the 2020 general election, investors dumped Irish banks, housebuilders and property stocks as the prospect of a Mary Lou McDonald-led government hovered into view.
This was a manifestation of a long-held view in investor circles that Sinn Féin would be bad for business. In 2015, a senior economist in Goldman Sachs suggested the main risk to Ireland's economic future was the party’s increasing popularity.
To the party, its supporters and many voters frustrated with financial orthodoxy, this is music to their ears. But it is something Sinn Féin is acutely aware of and sensitive to.
Once upon a time it argued for a corporation tax rate far in excess of 12.5pc, but for the past 15 years its manifestos have consistently committed to the famous low rate now set to change in 2023 — something, incidentally, Sinn Féin supports.
“We are a party that believes there needs to be a competitive edge in relation to taxation in this State and that needs to be continued,” finance spokesperson Pearse Doherty told the Sunday Independent.
Last Thursday, Doherty, party leader McDonald and public expenditure spokesperson Mairéad Farrell set out Sinn Féin’s alternative budget. It includes increasing taxes on people earning more than €100,000 and the abolition of a controversial tax break to senior multinational firm executives to fund measures such as abolishing the property tax and a restoration of the pension age to 65.
Their opponents decry it as economically illiterate, populist nonsense. Sinn Féin says it would be a budget “with real ambition to make a real difference in the lives of ordinary people”, as McDonald put it.
With the party commanding around a third of the electorate’s support in another opinion poll, the prospect of a Sinn Féin-led government is hovering into view. Already there are quiet and informal conversations among civil servants about that very prospect and how it might force them to change their approach after decades of relatively settled views.
Doherty believes multinationals and big business have nothing to fear from a Sinn Féin government. “They know that Sinn Féin isn’t going to go after them,” he said.
“If you talk to business leaders, they're telling you the biggest problem they have is housing and, you know, that's a big challenge in terms of attracting new investment and indeed retaining this current pipeline of investment that we have.”
Priorities would be capital investment in housing “to undo the damage done by the Government in relation to their housing policy”. Sinn Féin’s budget sets out a plan to deliver 20,000 social and affordable homes — "an area that has to be got right and has to be delivered”, Doherty said.
But in addition to investment in areas like housing and health — Sinn Féin proposes to hire 6,250 more workers to staff nearly 1,000 extra beds — Doherty insists there is plenty in there to ensure “Ireland is a competitive, and attractive place to invest, that companies are supported”.
However some high-paid executives might blanch at the prospect of higher income taxes. Not that Sinn Féin calls it that, rather it talks about a “solidarity tax” of 3pc on the portion of income over €140,000.
“It is about being in solidarity with the rest,” Doherty said. “For example if you are earning above €140,000, say you are earning €150,000, you’ll pay €300 more in tax.
“Now that’s not going to scare the horses in my view in relation to foreign direct investment — and indeed if foreign direct investors believe and want to make sure their employees continue to get that €300 extra for every €10,000 they earn, they just need to increase their salaries by that amount. It’s not a huge amount but collectively it does allow us to do the other types of things we want to do.”
Sinn Féin has modified this particular policy in recent years, it used to be targeted at people earning over €100,000 but the threshold has since been increased. Nonetheless the party does want to remove tax credits on a tapered basis on incomes above €100,000 — a measure that would raise nearly a quarter of a billion euro to fund its spending proposals.
Does Doherty think people earning more than €100,000 who have mortgages or rent, childcare and other weekly and monthly commitments, are rich? “No, I believe tax credits are there to support the incomes of low-income earners and those earning above €100,000 are not low- or middle-income earners. We're going to reduce the cost by two thirds in terms of childcare, so it benefits them.
“If they're renting, they will see a month’s (rent) come back into their pockets. This is about choices. In Britain, the Labour Party introduced it many years ago, the Tory party continued it, they didn't get rid of it as a right-wing party and that is that your tax credits disappear as you earn over a certain amount of money and it's about targeted resources,” he said.
“Tax credits are there to support low- and middle-income earners — those on above €100,000 can in my view afford to start losing those tax credits, not in a big cliff edge, but gradually as they earn above that.”
He said Sinn Féin will have “grown up conversations” after the next election. With all parties? “Of course.”
Including Fine Gael? “Look, we've always said that we’ll have conversations, but for us it’s not about who you are in government with… it’s about policy outcomes as opposed to the name of the party.”