Brendan Burgess
Founder
- Messages
- 52,144
Deposit interest
Depositors pay DIRT of 33% even though they are getting a negative rate of interest after inflation is taken into account.
Let's say that the interest rate was 5% with 0% inflation, then charging 33% on the 5% would seem reasonable.
But with interest rates at 1% (max) and inflation at 10% - a loss is being taxed.
Deposit rates don't keep up with inflation over the longer term, so is there a case for abolishing DIRT completely?
If, at some stage in the future, real interest rates are paid, then tax could be reintroduced.
Investments
We had a CGT rate of 40% on real gains, because the costs of the investments could be indexed for inflation.
Then CGT was reduced to 20% and indexation was abolished.
Then CGT was increased to 33% but indexation remains abolished.
Indexation should be a feature of any taxation regime so that only real gains are taxed.
The government of the day can decide what the fairest rate of CGT should be.
Brendan
Depositors pay DIRT of 33% even though they are getting a negative rate of interest after inflation is taken into account.
Let's say that the interest rate was 5% with 0% inflation, then charging 33% on the 5% would seem reasonable.
But with interest rates at 1% (max) and inflation at 10% - a loss is being taxed.
Deposit rates don't keep up with inflation over the longer term, so is there a case for abolishing DIRT completely?
If, at some stage in the future, real interest rates are paid, then tax could be reintroduced.
Investments
We had a CGT rate of 40% on real gains, because the costs of the investments could be indexed for inflation.
Then CGT was reduced to 20% and indexation was abolished.
Then CGT was increased to 33% but indexation remains abolished.
Indexation should be a feature of any taxation regime so that only real gains are taxed.
The government of the day can decide what the fairest rate of CGT should be.
Brendan