Dáil Éireann Debate, Tuesday - 7 November 2017
216. Deputy Michael McGrath asked the Minister for Finance his views on whether the break in the link between the exit tax and DIRT on savings products could result in a reduced intake between the two taxes overall; and if he will make a statement on the matter. [46222/17]
View answer217. Deputy Michael McGrath asked the Minister for Finance his plans to promote optimal tax collection as it relates to the exit tax and DIRT (details supplied); and if he will make a statement on the matter. [46223/17]
View answer218. Deputy Michael McGrath asked the Minister for Finance if the potential for a reduction in the exit tax in line with DIRT to result in higher net Exchequer returns over the long term as a result of more customers opting for investments over deposits with very low interest rates has been considered; and if he will make a statement on the matter. [46224/17]
View answerI propose to take Questions Nos. 216 to 218, inclusive, together.
When the then Minister for Finance announced in last year’s Finance Bill that he was reducing the rate of DIRT by 2% each year until it reaches 33% in 2020, he identified the cost of that measure as €9m for a full year, or €36m by 2020 (Revenue have subsequently revised the annual cost of a 2% reduction in the rate of DIRT down to €6.4 million). He explained that the cost of moving the other taxes which tended to move in line with the rate of DIRT had been tentatively estimated by Revenue as €14m per annum or €56m by 2020. Such costing estimates are based on the assumption of no behavioural change as it is not possible to estimate changes in behaviour.
The then Minister also agreed during the Report Stage of Finance Bill 2016 that the 2017 Tax Strategy Group (TSG) would examine this issue. This was done, and the report to the TSG containing this examination can be found at:
http://www.finance.gov.ie/wp-content/uploads/2017/07/TSG-17-11-Capital-and-Savings-Taxes-Final-PL.pdf.
Finally, I should also say that it is not possible to accurately estimate the changes in investment behaviour or any estimation of yield from individuals opting for investment products over deposit accounts if there was a change in the rate of exit tax as decisions to invest in specific financial products are driven by a range of factors and not only taxation.
