Michael McGrath (Cork South Central, Fianna Fail)
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94. To ask the Minister for Finance the estimated cost of reducing the exit tax rate of 41% on certain investment products to 33% in order to bring it into line with the rate of DIRT tax; the policy rationale for separating the rate of exit tax from DIRT; and if he will make a statement on the matter. [43770/19]

Paschal Donohoe (Dublin Central, Fine Gael)
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It is assumed that the Deputy is referring to Life Assurance Exit Tax (LAET).

Based on a pre-Budget base the estimated cost of reducing LAET from 41% to 33% is €39m.

Costs and yields for changes to LAET are published on page 13 of the Ready Reckoner on Revenue’s website at link: .

The Ready Reckoner will be updated to a Post Budget 2020 basis shortly and will be available at the same link.

Interested parties and in particular in the insurance industry have sought alignment of the rate of tax applied to DIRT to certain financial products subject to LAET.  I am aware of the arguments made in respect of this request.

As the Deputy is aware, there was a need to shape the expenditure and tax package in Budget 2020 in the context of potential future challenges. The cost of aligning LAET with DIRT is significant and would have been difficult to achieve in the context of competing demands on available resources.

Notwithstanding the potential Exchequer cost there are other issues that need to be taken into account when considering such a change. It is necessary to consider whether deposit accounts and certain investment products are comparable in terms of their structure, risk profile and expected return which could support an alignment of the rates of tax applied to them.

Therefore based on the above, including the need for prudence in an uncertain environment, no change was made to the rate of Life Assurance Exit Tax.