Are we back within the time constraints?
SECTION 11.
Question proposed: "That section 11 stand part of the Bill."
We are. We will discuss sections 11 to 19 until 6 o'clock.
On section 11, I strongly support the change in the rate from 10 per cent to 15 per cent.
The special savings account rate of 10 per cent was introduced because of the fear of the then Government that a great deal of money was going to leave country. Perhaps, due to the insertion of the special 10 per cent rate, it did not. I cannot see any great objection to the Government now raising it to 15 per cent. For people over the age of 65, there is already provision for the recovery of such moneys. It is obvious to me that many people are not utilising that relieving section and my main purpose in speaking on this section is to bring that to their attention.
There was at the time, apart from the 10 per cent special savings account rate, a special 10 per cent rate for special investment accounts. That was brought in to combat the feared distortion in the market place by giving banks a competitive advantage over life assurance companies, for example. However, I am afraid that has not worked because, under the legislation, 55 per cent of the money in a special investment account must be invested in Irish equities. I am sure that the Minister has received representations from the insurance industry because there has been very little take up on that and it has been suggested that some change should be made in that regard.
It is not that insurance companies do not want to invest in Irish equities, but a product whose fund is compelled to have so much of its portfolio in a specified area will not sell in the market place. It has been suggested to the Department of Finance that if the rule was changed to 25 per cent in Irish equities and another figure in Irish gilts, the State would still benefit and fund managers would be allowed some flexibility. This section only deals with the increase in the DIRT rate from 10 per cent to 15 per cent, but it is related to the other area because when it was brought in for special savings accounts, the special investment products were also included.
I ask the Minister between now and Report Stage, or in a subsequent Bill, to consider a change in that regard. I do not think there would be any loss to the Exchequer but it would level out the playing pitch between the banks and the life assurance companies. There is also now competition from foreign insurance companies. I know that the Minister will be willing to look at that.
I welcome the comments made by Deputy McCreevy and concur with his overall analysis. In fact, we have not altered the 10 per cent regime for the SIAs. We are aware that that part has not been working terribly well and there are various views as to why that was the case. The equities market has been fairly weak and we are getting indications from some stockbrokers that that might improve. The whole operation of that market is unsatisfactory from everybody's point of view and it is receiving consideration within the Department of Finance at present. Any changes which we bring forward, we will do in the context of next year's budget and subsequent Finance Bill. We have for the first time, because the two of them were brought in at the same time at 10 per cent, altered the rate in relation to the banks but not in relation to the investment accounts.
Question put and agreed to.