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