Stephen Donnelly (Wicklow, Independent) | Oireachtas source

I opposed the section but did so through Deputy Boyd Barrett. I am concerned about the lack of evidence. One of the things that section 30 does is increase the fund exit tax for life insurance and investment fund policies from 36% to 41%. The reason that I oppose it is not necessarily because I disagree with the measure. I oppose it because there was insufficient analysis to accompany the proposal. I received useful analysis from the Minister's officials after the briefing session last week.

My concern is with tax changes, as with those for health insurance policies and the variance changes being made to pensions. I opposed section 18 of this Bill but unfortunately I had to be in the Chamber last night to take Private Members' time so could not attend this meeting.

Section 30 is really complicated. It contains only one or two straightforward bits such as increasing the tax rate from 33% or 36% up to 41%. It also includes a bunch of complicated terms such as "at the rate of 80 per cent" for "at the rate determined by the formula— (H + 33) per cent where H is a rate per cent".

I shall outline my reason for opposing the provision. It is reasonable to assume that there will some behavioural change when things are made more expensive. For example, if we make health insurance and life assurance more expensive then fewer people will have it. In this case the Minister's officials have used zero elasticity assumptions and assumed no behavioural change. In the briefing note that I received there was a valid point made that it is very difficult to come up with an accurate behavioural estimate. I would much prefer to see an accompanying technical appendix provided for Dáil Éireann and particularly for the sub-committee that would allow us to assess the matter. We know that the Minister proposes to increase the tax from 33% to 41%. Can we have a few worked examples of how such a provision would change things? Can his officials estimate the potential behavioural changes?

Let us view the matter in terms of pensions. We had the 0.6% levy that was followed by a 0.15% increase and then changes were made to the standard fund threshold. There were also more changes. For example, in the public sector it was changed from final salary to salary average and the defined benefit change meant the multiple increased from 20 up to 37. Section 30 does not deal with life assurance but the same point applies. For good or bad reasons a lot of important things are becoming more expensive through taxation and there are fewer taxation deductibles. Section 30 deals with life assurance and other sections deal with pensions and health insurance. The accompanying impact analysis has not been supplied. It would help us to understand the rationale for increasing the exit tax from 36% to 41% and making all of the other complex changes to the calculation.

We believe we will see 5,000, 10,000, 20,000 or zero new life assurance policies. It is a point of consideration for next year's budget. Interrogating properly the impact analysis of these changes is impossible without the resources of the Civil Service. I do not know whether I oppose the section because I do not know what the Minister and his officials estimate as the impact of the section.