Call for lower exit tax on investments
Insurance Ireland said Government policy should not give preferential treatment to certain investment types. It has called on the Government to reduce the exit tax in the Budget to be fair to middle-income investors. The tax on savings in banks and credit unions has started to come down.
Deposit interest retention tax (Dirt) on interest earned on savings was reduced to 39pc in the last Budget. It had been 41pc.
The Dirt rate will then fall by two percentage points each year over the next four, until it falls to 33pc by 2020.
But the exit tax on life insurance investments or funds sold by life insurance and investment firms remains at 41pc.
The Dirt tax rate and the exit tax rate used to rise and fall in tandem, but the link between the two was broken in the last Budget. If nothing changes, Dirt will be at 33pc and the exit tax will still be 41pc.
Insurance Ireland chief executive Kevin Thompson said savings and investment policies sold by life companies were a key element of long-term financial planning for middle-income individuals and families.
“The life assurance exit tax needs to be reduced in line with Dirt to incentivise long-term financial planning for middle income earners,” he said.
“Government policy should not give preferential treatment to certain investment types and Insurance Ireland is calling on the Government to use the budget to reduce exit tax and give a fair deal to middle-income investors.”