Vol. 422 No. 4
13 Mr. Quinn asked the Minister for Finance if he has any plans to encourage the formation and marketing of investor unit trusts which would provide equity capital for small and medium sized Irish businesses by means of new tax based incentives which could be introduced in the second Finance Bill, 1992; and if he will make a statement on the matter.
During the Seanad debate on the 1992 Finance Bill I announced that my officials were holding discussions with representatives of the life assurance and unit trust industries to consider the impact of the changes in DIRT on their products. These discussions are still continuing. The issue is complex and no decision has yet been taken on changes in this area, which must be considered in the context of the overall tax code. I am, of course, aware of the importance of equity investment for small and medium sized Irish businesses. This is one of the major factors to be taken into account in the consideration of any proposals for changes in taxation of unit trusts or similar products.
I welcome the fact that the Minister, having heard the debate on Committee Stage, intends to remedy some of the damage incurred by these special savings accounts. My question is somewhat separate and I would ask him, therefore, to reply to it. Does the Minister have any specific intention, irrespective of what remedial action he might take in respect of the special savings accounts, to encourage the promotion of new unit trust type products that would be available for investment by way of venture capital in small and medium sized Irish industries?
The reason I linked the issue in my reply is that I believe this is a way it can be resolved. Proposals have been put forward by a number of people in the financial services area suggesting that both things could be done together by linking unit trusts and equity investments to what would be used to generate activity in small and medium sized enterprises. There is one substantial report from the industry in that regard which I am presently examining. I want to assure the Deputy that I am trying to deal with the issue he raised.
When does the Minister expect that the broad outline of this might be announced? Will there be detailed consultation with the financial institutions to ensure that the design of the product is something that will travel?
Yes. I had discussions yesterday with the financial industry and I am due to meet them again before the end of July. It will be about September before the details are published.
In the course of his discussions does the Minister intend looking at the present 3 per cent levy on insurance contracts which makes them less competitive as a result of the special deposit interest accounts that were introduced in the last Finance Act? In addition to having discussions with the insurance industry, does the Minister intend holding discussions with the banking institutions to ensure that money being put on deposit is used properly for providing seed capital for small and medium-sized industries?
I have had some discussion with the banking groups and I will be talking to the banking federation shortly. The issue of the 3 per cent is one of the items under discussion. The Deputy will recall that that levy was introduced because the corporation tax yield from life assurance linked investment was considered to be unacceptably low. In any resolution of the issue some solution to that must be found.
