Not so. In fact, the richest people in the world added more than $5 trillion to their collective wealth, according to Forbes.

In addition, almost 500 more people achieved billionaire status in the last year bringing to a record 2,755 the number of people on the planet whose net worth exceeds $1 billion.

And it’s not just the super-wealthy that have been doing just fine.

As the Central Bank figures on savings suggest, many people in this country have been putting plenty of cash into bank and credit union accounts in the past year, a situation that was replicated across the continent.

Gross household savings across the European Union rose from an average of 12% of income between 2010 and 2019 to over 23% in the middle of last year.

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Not everyone partaking in savings boom

But they are just averages that belie a more complex picture.

A whole sector of society did not share in that savings boom.

This includes people who found themselves temporarily or permanently out of work and saw their income streams drying up in the past year which may have necessitated liquidating any savings that they had put aside in the years before the pandemic.

This phenomenon has been characterised by the much-talked of ‘K-shaped’ recovery that appears to be materialising.

The corollary of this is that a more divided society could emerge at the end of the pandemic with the ‘haves’ at an even greater remove from the ‘have-nots’.

This prospect prompted a recent suggestion from the IMF that countries might consider the introduction of a temporary solidarity tax on individuals and businesses that have done well in the past year.

The Fund’s Head of Fiscal Affairs, Vitor Gaspar, said a symbolic rise in taxation ‘would strengthen social cohesion’ even if the public finances in most countries have withstood the pandemic hit in a fairly robust fashion.

Solidarity taxes have been here before

The idea of a solidarity tax has been around for a long time, as Brian Keegan, Director of Public Affairs with Chartered Accountants Ireland pointed out.

He cited the example of Germany in the aftermath of reunification – a tax that Germans are still paying over 30 years later (although it’s hoped it will have been abolished for the bulk of taxpayers by the end of this year.)

“There are few things stickier in public policy than a tax. Once it comes in, it’s almost impossible to get rid of,” he said.

We’ve had similar types of taxes here down through the years, including the income levy and health contribution (both of which were subsumed into the Universal Social Charge) and a little-remembered 1980s innovation called the farm tax which had the dubious honour of being the only tax that actually cost more than it generated in revenue.

“Farmers could opt to pay income tax or a fixed flat rate of tax by virtue of the value of the land they had,” Brian Keegan explained.

“The cost of sending surveyors and valuing the land ended up exceeding the amount collected.”

The current iteration of a solidarity tax being suggested by the IMF has its merits given the devastating impact that the pandemic has had on specific sectors of the population and businesses.

How could a tax like this be implemented?

Such a tax has already been introduced in Argentina in the form of a one-time special levy where the authorities demanded up to 3.5% of the total net worth of citizens who hold at least $3.4 million of assets.

But the South American nation is saddled with a crippling debt that has been made worse by the pandemic.

There would be many ways of approaching it.

One of the methods suggested by the IMF was to temporarily add a percent or so to the top rate of income tax and in that way those that earn more would pay more.

Another approach would be to introduce a tax on savings or through the capital gains tax system, Gerard Brady, chief economist with Ibec suggested.

Brian Keegan said it could be introduced through the PRSI system, a method of taxation that has been used in the past for introducing charges that have garnered little attention.

He cited the example of the employers’ rate of PRSI being increased specifically for the third level sector.

“This tax went completely under the radar. It was introduced so covertly that nobody knows about it.”

Mixed reception for the idea

The proposal for a solidarity tax was seized on by many politicians here, including one government minister.

Green Party TD and Minister with responsibility for social cohesion, Joe O’Brien, told Drivetime on RTÉ radio this week that the idea was ‘worth considering.’

However, it appears that the governing parties are not ad idem on the proposal.

Fine Gael TD Jennifer Carroll MacNeill told the same programme that Ireland already has a progressive taxation regimes in place which ensures that companies and Individuals that earn more, pay more in tax.

She suggested that the introduction of a solidarity tax could dissuade those who have saved large amounts of cash during lockdown from spending some of it when the economy reopens, a point also made by Gerard Brady.

“The recovery relies on getting the savings out and being spent in the domestic economy rather than taxing it. It is important not to spook the horses and 2021 is the wrong time to introduce new taxes.”

He suggested that there might be a discussion about a bigger state and more tax in the medium term, a prospect that will be dealt with by the Commission on Taxation and Welfare.

“You might see changes to the social insurance model in the long run, for example, but you should do it in a coherent way that makes sense rather than a one-off surcharge that looks good in the short term but changes nothing fundamentally,” he suggested.

Brian Keegan said it’s likely we will ultimately end up with a bigger state and higher taxes in the future.

“There’s no doubt but that the overall burden of taxation is going to increase in the next few years. It has to because we will have a much bigger set of social supports, also for the health system and a more expensive education system.

“That’s going to stay with us in the months and years ahead and it cannot be paid for through higher borrowings. The writing is on the wall. The tax yield is going to have to go up. And that will mean new taxes.”

What are the chances of a solidarity tax being one of those new measures?

Not likely, Gerard Brady says. Changes in taxation move at a glacial pace, particularly when they are introduced at a multilateral level where countries are required to move together.

He referenced the OECD process around corporate tax changes, which has been back in the news of late.

Proposed moves there, while given added momentum in recent weeks, have been in train for many years.

In a statement relating to the question of a solidarity tax, the Department of Finance said the Minister had no plans to make any further changes to the taxation of businesses other than through the OECD process, to which he is committed.

Any additional proposals, the Minister said, should be tabled with the Commission on Taxation and Welfare.

Brian Keegan said a specific solidarity tax, because it would have to be devoted to a particular purpose, would not be sufficiently flexible to address what the economy is going to need in the years ahead.

And then there’s the question as to who or what commercial entities should pay the tax, at what rate and how the proceeds are transferred to those who have struggled through the pandemic.

“Where do you set it? How do you decide who’s won and who’s lost?” Gerard Brady asked.

“You could think of lots of examples, but Revenue can’t operate like that. Once you get into talk of who gets hit and who doesn’t, you could be into years of discussion.”