Dáil Éireann Debate, Tuesday - 7 July 2020
204. Deputy Ged Nash asked the Minister for Finance his plans to review capital gains tax in each budget over the next five years; his views on the matter (details supplied) by the tax strategy group 2020 relating to the tax; and if he will make a statement on the matter. [14600/20]
View answerThe Programme for Government states that there will be a review Capital Gains Tax (CGT) in each Budget over the next five-years, in particular with the objective of supporting innovation driven enterprises that will help transition to a low carbon economy.
CGT is subject to ongoing review, which involves the consideration and assessment of the rate of CGT and the reliefs and exemptions from the tax. CGT policy and legislation is subject to consideration in the Taxation Strategy Group, as part of the annual Budget and Finance Bill process, is considered as part of a wider set of policy analyses (e.g. examination of revised CGT Entrepreneurs Relief as part of the 2020 Budget process) and in tax expenditure evaluation work. The requirements of the Programme for Government will become part of this ongoing work.
Ireland taxes wealth in a variety of ways, such as CGT and Capital Acquisitions Tax (CAT). These are levied on an individual or company on the disposal of an asset in the case of CGT, or the acquisition of an asset through gift or inheritance, in the case of CAT. Deposit Interest Retention Tax (DIRT) is charged at 33%, with limited exemptions, on interest earned on deposit accounts; and the Local Property Tax (LPT), which was introduced in 2013, is a tax based on the market value of residential properties. Capital taxes can help improve equity and tax fairness in the overall taxation system. However, the CGT yield in Ireland, while significant, is small relative to the other tax heads. Changes to CGT are likely to have a reduced overall impact on income and wealth inequality.
Against any revenue raising and equality arguments must be balanced the need to have a CGT system which supports economic activity and employment creation. Considerations such as the rate of CGT, relative international tax competitiveness and indeed the potential impact on investment activity is essential for a full view of the operation of the CGT system.
The Deputy may be interested to know that the most recent OECD Economic Survey of Ireland, published earlier this year, stated that the highly redistributive tax and transfer system has contained income inequality in Ireland.
