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Dáil Éireann Debate, Tuesday - 10 December 2019

Tuesday, 10 December 2019

Ceisteanna (133)

Tony McLoughlin

Ceist:

133. Deputy Tony McLoughlin asked the Minister for Finance his plans to reduce the current rate of the life assurance exit tax in order to bring it in line with the rate of DIRT; the reason there is an 8% difference in the two tax bands for savings; and if he will make a statement on the matter. [51290/19]

Amharc ar fhreagra

Freagraí scríofa

As the Deputy will undoubtedly appreciate, there were minimal changes in taxation in this year's Budget due to the need to take into account the possibility of a no-deal Brexit.

Any changes to align the rate of financial products subject to LAET with DIRT rates has an Exchequer cost. On a post-Budget basis, the estimated full year cost of reducing Life Assurance Exit Tax (LAET) from 41% to 33%, thereby aligning it with Capital Gains Tax (CGT) and Deposit Interest Retention Tax (DIRT), is €25 million. Costs and yields for changes to LAET are published on page 13 of the Ready Reckoner on Revenue’s website, which is available at the link below:

https://www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf

Notwithstanding the potential cost to the Exchequer, there are also other issues and policy considerations that need to be taken into account when considering such a change and whether it is appropriate to align the taxation rate applied to financial products subject to LAET with the rate applying to DIRT. It is necessary to consider whether certain investment products are comparable with deposit accounts in terms of their structure, risk profile, and expected returns and losses which could support an alignment of the rates of tax applied to them.

Given the above, as well as the need for prudence in an uncertain environment, no change was made to the rate of Life Assurance Exit Tax in Budget or Finance Bill 2019. However, I have asked officials in my Department to give this matter further consideration as part of the Tax Strategy Group process for 2020.

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