Tax changes to make it more attractive for people to invest their savings, rather than having that money sit in bank accounts, are being considered by the Government, Minister for Finance Michael McGrath has said.
A Department of Finance review of Ireland’s funds sector is due to be completed shortly, which is likely to prompt tax changes in the budget later this year.
The report is expected to highlight certain mismatches in the current taxation regime which are seen to make investing money less attractive for households.
Speaking in Brussels on Monday, Mr McGrath said he would be examining legislative changes in the coming months on the back of recommendations from the review. “We have over €150 billion of household deposits in Ireland and that funding is largely asleep. It’s earning little or no return, it is sitting in instant access, overnight or current accounts,” he said.
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“I’d like to see a significant share of those funds being put to more productive use in the economy, investing in structures that help to fund and support early-stage and innovative businesses,” he said.
The Government was planning to introduce changes to “encourage” people to look at investing savings, the Fianna Fáil Minister said.
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“I’ll have that report very shortly and it will feed into the autumn budget process with a view to decisions being made… and then enacted in the Finance Bill this year,” he said.
People should not be “penalised unduly” for trying to “put their money to work”, he said. “I do think tax has a role to play and I would anticipate making some changes,” he said.
Mr McGrath was speaking on his way into a Eurogroup meeting of several European Union finance ministers. The meeting was expected to discuss the capital market union, which is proposed reforms to make it easier for funds and investment to move within the EU, by bringing different national laws and regimes for things like insolvency closer together.
A debate by EU leaders at a summit last month became bogged down in disagreements over the direction of the changes. Ireland and a majority of other countries opposed a proposal favoured by France that would have seen the Paris-based European Securities and Markets Authority (Esma) play a much bigger role, as an expanded regulator in any new union for capital.
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Minister for Public Expenditure Paschal Donohoe, who chairs the Eurogroup as president, said he would be looking to get euro zone finance ministers to agree to a “work plan” to move the reforms forward. Ireland would be a “willing participant” in discussions around changes to national insolvency regimes, he said.
“The first step that we have to take is to reach a common view in relation to how we want insolvency procedures to change. We have committed to change, but we now need to work with the [European] Commission to reach a view in relation to what that change would look like and what a common approach would be,” he said.
Some “political differences” on the capital market union reforms would not be easy to overcome, according to EU economy commissioner Paolo Gentiloni. Speaking before the Eurogroup meeting, Mr Gentiloni said if there was no agreement then he expected a number of EU countries “will move forward together” themselves without the rest of the bloc.
Mr Donohoe told a press conference on Monday evening it was his “strong hope” that member states would move forward on capital market reforms together. He said if several countries did push ahead that should be a “catalyst” to the rest of the EU to follow.
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