Peter Barry
Question:33 Mr. Barry asked the Minister for Finance if he has seen the criticism by a person (details supplied) of the 1992 budget which this person says was the reason he, and many more executives, have decided to live abroad.
Ceisteanna — Questions. Written Answers. - Criticism of 1992 Budget.
I have seen the remarks of the person referred to by the Deputy.
I do not accept the view implicit in them that the Irish tax system is unfairly adverse for executives. The only specific complaint made concerned the introduction this year of a single rate of capital gains tax, at 40 per cent. However, I would point out that the introduction of this single rate of capital gains tax is part of the Government's overall drive to reform the whole tax system and a necessary component in making the tax code more equitable. A single rate of capital gains tax greatly simplifies the tax system and was recommended by the Commission on Taxation. As far as the investor who makes a long term investment in shares is concerned, the fact that capital gains tax is indexed for inflation means that the effective rate of tax for such investors will continue to be significantly less than the rate of tax on those who buy and sell shares frequently.
Consideration of the Irish system must also have regard to the fact that rates of social insurance here, for both employers and employees, are among the lowest in the European Community.
The third aspect affecting executives in this context is of course income tax. Here I would point out that substantial progress has been made in recent years in reducing tax rates and otherwise improving the system. As the Deputy will be aware, the standard rate of tax, which had stood unchanged at 35 per cent for more than 20 years, has now been reduced to 27 per cent, while the standard rate band has been extended by nearly 60 per cent since 1987. Finally, the top rate of tax, which is presumably the one of greatest interest to executives, has been reduced over the past eight years from 65 per cent to 48 per cent.