Dis­ap­point­ment for in­vestors as Dono­hoe rules out tax cut

Irish Independent - - Business - Char­lie We­ston Per­sonal Fi­nance Edi­tor

FI­NANCE Min­is­ter Paschal Dono­hoe has con­firmed that he will not in­clude any pro­vi­sion in the Fi­nance Bill to cut the exit tax on in­vest­ments.

Calls for a re­duc­tion in the tax, which is 41pc, were made in the run-up to the Bud­get.

But there was no re­duc­tion an­nounced on Bud­get day de­spite the de­posit in­ter­est re­ten­tion tax (Dirt) com­ing down.

The exit tax and Dirt tax rates used to move in tan­dem.

Mr Dono­hoe con­firmed at the In­de­pen­dent News & Me­dia Bud­get briefing in the Hiber­nian Club on Dublin’s St Stephen’s Green that he would not in­clude any change to the exit tax in the Fi­nance Bill.

The bill gives ef­fect to the Bud­get mea­sures and is of­ten used to in­clude ad­di­tional changes to those an­nounced on Bud­get day.

Mr Dono­hoe said he had lim­ited re­sources so was re­stricted in what he could de­liver.

The exit tax ap­plies on life in­sur­ance in­vest­ments or funds sold by life in­sur­ance and in­vest­ment firms.

Stan­dard Life es­ti­mates that around one mil­lion peo­ple hold th­ese funds. The in­vest­ment firm’s head of dis­tri­bu­tion, Jen­nifer Richards, said she was taken aback at such a de­fin­i­tive ‘no’ from the min­is­ter.

“The Govern­ment’s job is to im­prove, not dam­age, peo­ple’s long-term fi­nan­cial well-be­ing,” she said.

“Mak­ing it more tax-friendly for peo­ple to put their money on de­posit where they’re vir­tu­ally guar­an­teed to lose money over the long term is not in their best in­ter­ests,” Ms Richards said.

“The min­is­ter and his Govern­ment need to un­der­stand this is a se­ri­ous is­sue for over one mil­lion savers.

“Work­ing peo­ple and pen­sion­ers will be the most af­fected, the lat­ter be­ing par­tic­u­larly big de­posit own­ers.”

The cost of re­duc­ing the exit tax by 2pc is around €14m, Stan­dard Life said. It ar­gued that this was a tiny per­cent­age of the an­nual tax take.

Hav­ing an exit tax that is higher than Dirt doesn’t make sense any which way you look at it. It’s bad for savers, it’s not good for Rev­enue’s tax take go­ing for­ward, and it’s far from op­ti­mal pol­icy mak­ing,” Ms Richards added.

Dirt will go to 37pc next year. The 2pc cut will be re­peated in fu­ture years un­til Dirt is brought down to 33pc in 2020.

Paschal Dono­hoe at Bud­get 2018 pre­sented by INM and spon­sored by KPMG

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.