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Sinn Féin Economics: Shifting Sands or Soundbites?

Sinn Féin Economics: Shifting Sands or Soundbites?

As leaders of the Opposition, the task at hand for Sinn Féin to form the next government is to increase its appeal to the middle-ground voter, in particular business sectors and middle-income households while still maintaining appeal to its core voter base. Through its economic policies, the party will be determined to convince the Irish electorate that these objectives are not mutually exclusive. As Sinn Féin’s recently published Alternative Budget illustrates, the party has adapted and even ‘softened’ some of its core economic policy positions in recent years, despite continuing to drive the same messaging behind these policies, which the party communicates so effectively.

Scrutiny of Sinn Féin’s messaging in the context of its actual policy positions will only grow as it continues to act as a ‘government in waiting’. When asked at the launch of the party’s Alternative Budget whether targeting higher income earners would have negative consequences on foreign direct investment (FDI), party leader Mary Lou McDonald TD stated that Sinn Féin recognises FDI as a “critical part of the Irish economic model” and indeed, the party is certainly making efforts to give this more than just lip service, as Deputy McDonald’s engagements with US multinational firms this summer would suggest, as well as Finance Spokesperson Deputy Pearse Doherty’s own recent meetings with ‘big tech’ firms on domestic shores.

This certainly marks a pivot in Sinn Féin’s enterprise policy, which was once very much focused on the domestic indigenous economy and small businesses, particularly in the post-financial crisis years, where they comfortably took the line of attack against government protecting the interests of a select elite, while generating a two-tier recovery that favoured ‘big business’. Their General Election 2016 manifesto stated: “Long-term economic recovery can only be secured through the creation of good jobs and the development of an innovative indigenous enterprise sector…Our priority is the creation of decent jobs with decent pay and to deliver for our Small and Medium Enterprise (SME) sector…These businesses are the driving force of economic activity in the State.” This persisted in their 2020 General Election manifesto, which included: “While we recognise and value the many benefits and jobs FDI has brought, we need to rebalance our economy and ensure small businesses across Ireland receive the required assistance from central Government to help them prosper and grow.”

A change in narrative and policy

This narrative has certainly softened in recent years to one that is warmer to investors and ‘big business’, parties which Sinn Féin “won’t go after”, in Doherty’s own words last year as it continues to reassure business sectors of its economic policies. The party claims that from its own engagement with multinational firms, the biggest threat facing the sector and Ireland’s attractiveness as an investment location are systemic issues around infrastructure, housing and childcare, which they say have worsened under previous governments.

Not too long ago, the party called for the State’s 12.5% corporate tax rate to be increased to 17.5% however, it came round to supporting and defending the Irish trademark rate (as did other left wing parties). The party’s position on this has been soft in recent years and arguably in line with the government’s own: they called for the 12.5% rate to be protected in any OECD agreement, criticising the government for failing to secure it but then recognising that the international tax systems were in need of reform and that it was in Ireland’s interests to remain “inside the tent” – almost verbatim the government and Minister for Finance Paschal Donohoe’s own language when an OECD agreement was reached last year.

Other positions which the party has softened in recent years is its tax levy on high earners – which it has labelled a “solidarity tax”. In 2018, the party proposed a 7% levy for the portion of incomes above €100k. This then became a 5% levy on income over €140k in the party’s 2020 General Election manifesto, and then a 3% levy on income over €140k as per the party’s Alternative Budgets the last two years.

In 2016, the party called for Local Property Tax (LPT) to be abolished, but the party’s position now is for LPT to be ‘phased out’ gradually and replaced with a 1% wealth tax on assets over €1 million. Interesting to see will be how the party maintains this position in the coming years and in the lead up to the next election: Sinn Féin remains an outlier among the other left parties in seeking to abolish LPT – claiming it disproportionately impacts ordinary workers and families – but given that most Irish household wealth is comprised of property, LPT is already a wealth tax, as has been argued.

Core policies on taxation

Nonetheless, Sinn Féin has stood firm on many of its hallmark tax policies, which the party communicates effectively and which maintains appeal to its core voter base. These include a 40% Capital Gains Tax rate on individual incomes above €500k; removing tax credits on a tapered basis for incomes above €100k; and the aforementioned ‘wealth tax’ of 1% on net assets above €1 million (excluding family farms). The party has also been vocal on abolishing the Special Assignee Relief Programme (SARP), a targeted tax relief scheme for high income earners and which the party has labelled a “tax break given to the richest multinational employees”. However, this was a proposal noticeably absent in the party’s Alternative Budget last month, despite Deputy Doherty’s insistence as recently as this year of his party’s intention to abolish it. Doing so would, in reality, result in only negligible tax gains for the Exchequer so perhaps this is a further proposal in which the party’s stance has softened.

As Sinn Féin’s Alternative Budget and current policy positions show, they have a fine line to walk with their ambitions to form the next government: they must balance the need to continue to appeal to ‘big business’ and middle-income households in particular, while remaining true to their core voter base. As with any party eyeing power, there is realisation that compromise on core party policies will be inevitable amid efforts to increase appeal to the middle ground. This is already underway within Sinn Féin and will only accelerate as the next general election appears on the horizon but continued focus will be on whether the party adapts its policy positions or simply its messaging behind them.



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