To repair the damage of lockdown, we should focus on making poor people richer, not rich people poorer

AS the Covid-19 pandemic fades, attention is turning towards rectifying the economic damage caused by lockdown.

Already bean-counters and special interest groups have assembled a smorgasbord of special pleading that will likely benefit no one but themselves.

There are arguably three key observations central to delivering solutions.

1. Income tax makes up 25% of all taxes raised by the government.

2. The top 1% of earners pays more than a third of all income tax in the UK, or 8%-plus of total tax yield. On a pro rata basis, given that Northern Ireland’s population of 1.8 million is roughly 3% of the UK’S, we could guestimate this amounts to 9,300 individuals in Northern Ireland. To be in the top 1% of income tax payers in the UK, a taxable income of at least £160,000 is required.

3. This cohort of 9,300 needs to increase 13-fold to double the total tax yield in Northern Ireland and 26-fold to treble total tax take. A portion of this increased total can then be redistributed to the less well-off.

The top 1% of earners in the UK pays the same tax (8%-plus) as comes from corporation tax (8%), property taxes (9%), capital taxes (5%) and fuel duties (4%) combined.

It is arguably far easier to devise regulatory system to bump those on a lower income up to £126,000-plus than it is to increase other taxes 13-fold.

The most potent argument in favour of this model is that a typical five-year government requires solutions that work and can be rapidly implemented if they are to successfully seek re-election.

The one flaw is that income tax flows straight to the Treasury. The cure for that problem is for the Executive to repatriate tax and spending powers.

DR BERNARD MULHOLLAND Belfast