Greens recently blocked CGT reduction to 20%

A

azerogo

Registered User
Messages
56
A bit late to this as only seen it recently, that the plan was to drop CGT to 20% in july for 18 months to stimulate the economy and was blocked by the Greens, details below.

Tax cut on asset sales dropped after coalition row

A major tax cut on the sale of assets was dropped after another row between the coalition parties.
www.independent.ie

Surely this made perfect sense with people currently sitting on assets rather than pay 33% - currently one of the highest rates in the OECD. (I'll disclose I'm one of them)

https://www2.deloitte.com/ie/en/pages/tax/articles/capital-gains-tax-for-budget-20203.html argue that when the reduction previously went from 40% to 20% the related tax yield increased exponentially.

I suppose the question I'm wondering if the next budget will see this finally reduced if it's already in the back of the minds of the current government?
 
very interested in this, we are holding our only investment rental cottage due to the terrible % hit of CGT, quite sickening. And the indexing stopped in 2002.

Bought in 1995, is supposed to be a major component of a modest
pension contribution (or might need it sold sooner for offsprings college costs) but that post-crash CGT increase from 20 to 33%, wow, how annoying.
 
How would bmount's selling of his holiday home stimulate the economy?

How would my selling of shares in CRH and Ryanair stimulate the economy?

I think that the rates are too high and that reducing them would increase the number of sales but I don't see how it would stimulate the economy?

Brendan
 
It doesn't directly but very well could indirectly. More cash in the Governments pocket means less need to go and generate tax income from either means, for example, raising income tax.
 
Government will get 20% sooner rather than 33% later.

Sellers will have more cash to splash.
 
Because the cash generated from the sales will go back into the economy through purchases, new cars, house extensions, staycations and numerous other activities, it's not like anyone will sell assets and leave it on deposit
 
bmount said:
And the indexing stopped in 2002.
Click to expand...

This is a much bigger issue. You shouldn't be taxed on the increase in your wealth that is due to inflation.

A tax system should be stable and predictable to encourage investment. Re-introducing indexation on capital gains would be a sensible, structural change to the tax base.

Temporary holidays to get everyone trading would not be.
 
Last edited:
Yes restarting indexation from 2002 would be a fair and sensible thing to do.

A modest drop in CGT to 30% even in 2021 budget would help too.
 
I'd much prefer to see the government introduce a UK ISA style scheme, where individuals can put a capped amount of their savings in each year and it can grow tax/complexity free. This allows the average person benefit from the tax cut as well as get access to the much better returns available in markets/bonds compared to deposit accounts.

Also would like to see them increase the Entrepreneur Relief on CGT scheme, I'm not sure the right figure but the UK's is £10m compared to our €1m. This should increase company and hence job creation.

The CGT rate should stay where it is or be wrapped into the income tax regime so you pay your marginal rate on all income, whether it be from capital or your labour.
 
that idea would be severe on marginal rates of 50% here.

people have different focusses, sounds like you want to help entrepreneurs but hammer people with a modest 2nd property....
 
bmount said:
people have different focusses, sounds like you want to help entrepreneurs but hammer people with a modest 2nd property....
Click to expand...
I don't want to hammer people with modest second properties at all. What I want to avoid is helping out a small number of average people who happen to be selling a 2nd property and might benefit from the reduction to the tune of €5-10k once in their lifetime, while giving a big tax cut to very wealthy individuals who might benefit much greater amounts every single year. I'd have no problem with something like a capped lifetime CGT exemption, so somebody can have one significant capital gain in their lifetimes without being hit too hard.

Reducing the tax burden on wealthy individuals (by decreasing the CGT rate) just to save a handful of people a couple of grand makes no sense to me at all.

Also FWIW I'm not too pushed on helping entrepreneurs specifically, it's the side-effects of entrepreneurship on our society/economy that I think is worth encouraging.
 
Last edited:
Thanks, yes I like the lifetime cap idea, very good, so who is in a professional capacity to put such fair ideas forward to government ? Or has this been dome somewhere ?

I work in IT.
 
I’m not surprised by this in any way and I think it’s a good idea.
IIRC it was during Charlie McCreevy’s time that CGT dropped from 40% to 20%. The country was awash with money and the government finances (in terms of the bottom line) had never been so good.
The Deloitte view may be accurate, however, we had economic expansion back then.
2020 is different. We’re in recession. Unemployment is high. We’re in the midst of a once-in-a-century pandemic. There has never been so much uncertainty worldwide. The government coffers are stretched.
Few with assets are going to be incentivised to sell if CGT is dropped down to 20%. What are they going to do with the cash? Splurge? I doubt it; don’t forget the pandemic. Invest? With so much uncertainty? Round-the-world trip-of-a-lifetime? Ha!
The only people that are going to sell assets at the moment need the money. And sell they will regardless of the rate. And the state needs its cut. Leaving it at 33% is prudent on every level.
 
Zenith63 said:
Also would like to see them increase the Entrepreneur Relief on CGT scheme, I'm not sure the right figure but the UK's is £10m compared to our €1m. This should increase company and hence job creation
Click to expand...

The UK reduced their figure from £10m to £1m in the most recent Budget.

The logic being that the relief is expensive and only benefits a small number of already wealthy people each year.
 
It’s simple lower tax means more transactions and an increase in revenue. Also more fees and vat Re estate agents and lawyers and accountants who all pay more income tax and the economy grows. The greens far left ideology despises profit and wealth and does not encourage self reliance and hard work to better the lot of yourself and your family by taxing you to death and then once your dead they want even more.
 
Nicklesilver said:
It’s simple lower tax means more transactions and an increase in revenue. Also more fees and vat Re estate agents and lawyers and accountants who all pay more income tax and the economy grows.
Click to expand...
There’s a tipping point in most taxes though where going lower no longer increases activity sufficiently to replace the lost revenue, the divining of that point is anything but simple.

To quote from the Dept of Finance on the topic, who in summary don’t believe there is sufficient evidence to suggest a CGT reduction would be beneficial -


There are so many better ways to reduce tax that could target low and middle income earners more accurately it’s a bit mind boggling to think this was suggested, especially in the current climate where people are marching in the streets against landlords etc.
 
Last edited:
Here's a proposal:

Re-introduce indexation backdated to 2002. Commit to keeping the 33% rate for the lifetime of the government.


This would reduce the base a little bit as inflation has been 23% since 2002, but most of this inflation occurred before 2008, so there would be very little effect on gains made in the last decade or so. In the long term indexation is much better as you shouldn't be penalised or advantaged for gains brought about by inflation.
 
Low an middle income earners pay little or no income tax so a reduction in indirect taxes such as VAT and duties would impact them more. If we want low and middle income earners to feel better off the best thing we could do is reduce the cost of living. The best way to do that, by far, is to reduce the cost of service delivery by the State as that is the biggest contributor to the overall cost of living.
 
You must log in or register to reply here.
Menu
Log in
Register