asked the Minister if he will indicate the yield to the Revenue which would accrue from (a) a 10 per cent and (b) a 20 per cent levy on all funded pension schemes.
Ceisteanna — Questions. Oral Answers. - Funded Pension Schemes.
32.
The Deputy has not stated in his question what monetary base is envisaged for such a levy. It is estimated by the pensions industry that the total assets of funded pension schemes may currently amount to about £4,000 million but presumably the Deputy is not asking about a levy of 10 per cent or 20 per cent on these assets.
On the income.
If the Deputy is inquiring about a levy on the investment income there are two possibilities, depending on whether the benefits paid out to pension beneficiaries are netted off or not. There is no firm figure to hand for the total amount of investment income accruing to all funded pension schemes in 1986. The best estimate available is that pension funds may receive of the order of £350 million in 1986 in investment income and realised capital gains, net of benefits paid out to beneficiaries. A levy of 10 per cent on such a base would yield £35 million and a levy of 20 per cent would yield £70 million.
Would the Minister not acknowledge that any such levy would be very undesirable for a number of reasons? First, it would further undermine investment confidence in this country, which has already been decimated by taxes such as the DIRT tax and others introduced by the Minister. Secondly, it would be unfair in that it could only apply to funded pension schemes in the private sector, or sometimes in the semi-State sector, but could not extend to non-funded schemes such as those in the public sector. That would be blatantly and obviously discriminatory. Thirdly, in view of the fact that these pension funds are applied to a very considerable extent towards national developments or national assets — about 45 to 50 per cent are held in Government stock and a further 20 to 25 per cent in companies securities in Ireland, though there is not much joy for them in that now — and as only about 10 per cent at the moment is invested outside, would the Minister not acknowledge that for all those reasons — equity, the whole climate and lack of confidence in our financial institutions at the moment and, finally, because so much is available for investment here — that it would be very damaging indeed to take short term advantage for the sake of getting a few more pounds into the maw of the impoverished Minister for Finance?
I note with interest what the Deputy has said. However, the question that he put to me is purely a statistical one seeking an indication of yield. It does not raise any policy questions and therefore I do not propose to become involved in a debate on the merits of the points he has made, beyond saying that I have noted them with interest.
In view of the amount involved — the Minister said in one case, 10 per cent, or £835 million, and that the levy will only be £70 million — the Minister should indicate whether he would contemplate such a disastrous proposal. If he did not, investment confidence can be restored. In view of the damage caused by the imposition of DIRT, will the Minister indicate, before more money flows out of the country, that he will not do so? We will lose millions if things go on as at present.
As I indicated in reply to questions by Deputies Browne and Ahern, it is not the custom to get involved in any discussions in regard to tax policy in the future at Question Time. The suggestions made by the Deputy have been carefully noted and if anything of the sort is mentioned to me, I will of course bear in mind the points which Deputy O'Kennedy made.