Róisín Shortall
Ceist:373 Ms Shortall asked the Minister for Finance if he will provide details of the estimated cost to the Exchequer in the current financial year of the reduction in the rate of capital gains tax. [9500/98]
Written Answers. - Tax Yield.
On a static basis the reduction in the rate of capital gains tax from 40 per cent to 20 per cent was estimated to cost £40 million in a full year. However, it was expected that there would be dynamic effects from the reduction, e.g. an increase in the level of disposals of various types of assets. This additional revenue from an expected increase in the level of disposals along with the estimated gain from the change in the annual allowance meant that on budget day I expected that the full year cost of the reduction in the rate of capital gains tax from 40 per cent to 20 per cent would be of the order of £19 million, with a £5 million cost for 1998.
Finally, I would like to point out that since I cut the rate of capital gains tax, there has been a considerable increase in the level of activity and turnover of shares on the Irish Stock Exchange and market commentators have suggested that some of this increase in turnover is a direct result of the reduction in the rate of capital gains tax.