Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

Deputy Michael McGrath is aware of the DIRT changes announced in the budget by the Minister, Deputy Noonan, and as such I will not go through them again now. The Deputy is also aware that in the past the rates payable on a series of other taxes, including exit tax, on life assurance policies have tended to move in line with DIRT. However, on this occasion the Minister took the decision that those other rates would not be reduced, and for the following reasons. The cost of reducing the rates of the other taxes, where the rates payable have tended to move in line with the rate of DIRT, by two percentage points has been tentatively estimated by the Revenue Commissioners to be €14 million per annum or approximately €56 million per annum by 2020, the four-year period over which DIRT is to be reduced. It was, therefore, too costly to the Exchequer to reduce the rates applying to the other taxes in the same manner as is being done in terms of DIRT.

When the rate of DIRT was originally increased, it was aimed at revenue raising and at encouraging consumer spending to boost economic activity. The Minister is conscious of the impact of DIRT rates on the smaller saver who invests in retail savings and where there has been a long period of low interest rates and consequently a low rate of return on such products. As consumer expenditure has now increased significantly it is now possible to reduce the rate of DIRT to improve the return to the smaller saver. A report, prepared within three months of the passing of this Bill, is unlikely to reveal anything we do not already know. The issue is not a lack of desire to reduce the rates of exit tax on the other taxes that have previously been linked to the rate of DIRT, but is a result of the cost of moving all the rates in tandem due to the not inconsiderable cost of doing so.

I can assure the committee, and particularly Deputy McGrath, that in common with all taxes, exit tax is subject to ongoing review and in this process the rate of tax, as well as all reliefs and exemptions, are carefully considered. For these reasons, I do not propose to accept this amendment. I will undertake to speak to the Minister about the tax strategy group being asked to examine this area for next year, which may meet the desired effect of the amendment.