Oireachtas Joint and Select Committees

Wednesday, 17 November 2021

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach

Finance Bill 2021: Committee Stage (Resumed)

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

Deputy Doherty’s amendment seeks a report on the introduction of a 40% rate of capital gains tax on the disposal of assets made by high-income individuals. Revenue has advised the estimated additional revenue that could be generated by introducing such a rate of capital gains tax on the disposal of assets by individuals with income in excess of €200,000, is €305 million. This estimate is based on income and CGT returns for the 2018 tax year, the latest year for which full income information is available and does not include any yield in respect of companies. It assumes no change in behaviour by individuals resulting from the increase in the tax rate.

Increases in rates, such as are contemplated for the purposes of the proposed report, may have a significant behavioural impact. Capital gains tax is dependent on individual behaviour and a change in rate may not produce a corresponding increase or decrease in tax yield. In current economic conditions, any estimate of additional yield must be treated with a high level of caution. The realisation of any estimated yield from an increase in taxation on assets relating to property is subject to movements in the value of such assets, which are currently occurring in the economy. In addition, therefore, the increase in the rate could, in theory, not lead to such a significant change in the yield from the tax.

As the Deputy is aware, CGT, in line with all taxes, is subject to ongoing review, and this forms part of the consideration of the Tax Strategy Group and its paper on CGT which it publishes every year. Given this matter is covered through the TSG process, I do not propose to engage in a separate reporting process on this issue. Therefore, I do not accept this amendment.

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