Because the higher tax bill comes with higher returns/diversification from ETFs.
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Is the 41% Exit Tax Soon to be Scrapped? Michael McGrath to Review
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Duke of Marmalade
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Yes, currently ISA annual limit is £20k. SIPPS are a form of pension so I guess we do have that.
If tax free savings schemes up to €25k p.a. (€50k per couple) were introduced you can laff at Laffer - tax take will collapse!
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Yup.
And that’s why SF’s proposal to further reduce the SFT is so dangerous. Hospital consultants will retire in their droves.
NoRegretsCoyote
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There are about 380k public servants and by my estimate a maximum of 1% of these would ever be impacted by the SFT as it stands.
I agree that a radical reduction would lead to a greater impact on public servants but I wouldn't design policy around this pretty small group.
The SFT is only a concern for a tiny % of public sector employees - no doubt about that.
But here’s the problem - the overwhelming majority of that cohort are hospital consultants.
It would be an absolute disaster if we saw consultants retiring in their droves in their early/mid 50’s to avoid the impact of a dramatically reduced SFT.
I’ve no issue with a reasonable SFT but I happen to think that the current level is about right.
Yes my overall tax bill will be higher (both in the 1st year and final (selling) year), But I will still be better off!
I'm assuming 1% per annum better return with the ETF's (reasonable with lower fees, better diversification, passive mgmt etc.). My overall position will be better off within 1 year. The 1% difference compounds so the longer I leave the investment the better off I will be (both on a nominal and % basis). And the more tax I will pay (both on a nominal and % basis). Everybody wins as long as my 1% outperformance for ETFs holds true.
Duke of Marmalade
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Okay, so that is the same reason as @Corola gave.
From the RTE scandal we find that Tubridy was entitled to "exit payments " on completing his contract with RTE which he then waived.
The humble ETF investor gets lumbered with exit taxes when he completes his contract , maybe revenue can waive these taxes now in the light of what's going on in RTE
The humble ETF investor gets lumbered with exit taxes when he completes his contract , maybe revenue can waive these taxes now in the light of what's going on in RTE
But the deal is the same!
The "humble" EFT investor only gets lumbered with exit taxes if their investment has made a profit. And if they waive their profit - which effectively is what Tubs did in waiving his "exit payment" - then they won't have to pay any tax!
Actually with ETF's you can get hit with Exit taxes even if you make a loss!
If you buy 2 ETF's and 1 makes a small profit and the other a large loss, you will owe taxes on the profit because you are not allowed to offset ETF losses.
God I hate Exit Tax!
100% - It's just a matter of when.
47 submission have been made already. The vast majority of those from individuals, I'd say.
The consultation process is open until 15th Sept.
Gerard
www.bond.ie
47 submission have been made already. The vast majority of those from individuals, I'd say.
The consultation process is open until 15th Sept.
Gerard
www.bond.ie
100% for reform or a reduction in Exit Tax?
I think reducing Exit Tax for the “”wealthy”” heading into a General Election against left-wing populists during an inflation crisis would be political suicide.
I’d have more hope for reform, but having seen some of the submissions that are being sent, from the Reddit IrishPersonalFinance sub for example, there’s no real consensus about what changes people want and many of them are diluted by fairly uncompelling arguments like ‘the government should want to ride shotgun on my personal investments in the hope of earning extra tax revenue in 10-20 years’
. A sovereign wealth fund administered by the general public, what could go wrong!A UK-style ISA scheme (best not brand it that way given the opposition!) would be a great way of dodging messing with Exit Tax and taking money out of the economy for a while to help tackle inflation. Structured and pitched right it could also be seen as a dig out for the squeezed middle.
100% on both, it's just a matter of when.
You don't have to be 'wealthy' to be saving €100/€200 per month into a savings plan for your kids education or to invest €5,000 in a unit-linked fund. The reach of life assurance exit tax is broad. Not everyone lives in the AAM World of €2m pension funds and make-overs that are jaw dropping to the less well-off.
That sub is very informative on the thinking/questions of, what I would guess are mainly, young people. They have to be listened to too. A good few posts from folk in their late teens so I'd say the demographic there is totally different to here. They (mainly) want to do things for themselves and just need a small bit of guidance. Might be no harm if a few regulars visited there now and again and posted with the same handle as they have on here. Do good.
A gross roll-up savings scheme with a limit of €5,000 pa couldn't be seen as something for the wealthy. I'm thinking that now that the people who make the rules on saving/investing are coming off the real property drug that it's in their interest too to have an alternative, understandable, fair way to save/invest that doesn't have a taxation system that's a convoluted or as high.
Households are still saving over €1bn a month via deposits. At the end of 2019 there was €110bn of household deposits. It's now circa €152bn. That has to be a concern for Government.
Gerard
www.bond.ie
You don't have to be 'wealthy' to be saving €100/€200 per month into a savings plan for your kids education or to invest €5,000 in a unit-linked fund. The reach of life assurance exit tax is broad. Not everyone lives in the AAM World of €2m pension funds and make-overs that are jaw dropping to the less well-off.
That sub is very informative on the thinking/questions of, what I would guess are mainly, young people. They have to be listened to too. A good few posts from folk in their late teens so I'd say the demographic there is totally different to here. They (mainly) want to do things for themselves and just need a small bit of guidance. Might be no harm if a few regulars visited there now and again and posted with the same handle as they have on here. Do good.
A gross roll-up savings scheme with a limit of €5,000 pa couldn't be seen as something for the wealthy. I'm thinking that now that the people who make the rules on saving/investing are coming off the real property drug that it's in their interest too to have an alternative, understandable, fair way to save/invest that doesn't have a taxation system that's a convoluted or as high.
Households are still saving over €1bn a month via deposits. At the end of 2019 there was €110bn of household deposits. It's now circa €152bn. That has to be a concern for Government.
Gerard
www.bond.ie
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basilbrush
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For distributing ETFs, at least, it would be an increase in tax for the "wealthy" if the income was instead treated like ordinary dividends. I imagine that left-wing populists like the idea of progressive tax rates rather than taxes that apply the same rate to everyone.
I had to laugh at that, people looking for money makeovers on this site with already huge pensions and salaries. Yet the person maybe wanting to put just 5000 euros into a global ETF is getting screwed with exit taxes and "deemed disposal " malarkey
It will be a few years before any major reform come into place.
I would love to see a lower headline figure for Exit Tax this budget even to 39%, it would make the fund/ETF space a bit more competitive. Figure out the deemed disposal and capital losses later. Just start getting that rate down.
I would love to see a lower headline figure for Exit Tax this budget even to 39%, it would make the fund/ETF space a bit more competitive. Figure out the deemed disposal and capital losses later. Just start getting that rate down.
Disagree. We have an incredibly complicated Exit Tax system (even Revenue themselves can't issue clear guidance on what does and doesn't qualify). It's manifestly unfair both in the way it taxes you on paper gains instead of real gains and ignores losses. It's administratively a complete nightmare (trying to keep track of the 8 year rule for multiple buys). It discourages the majority of people from investing in the product (ETFs) best suited to them. And it takes in hardly any extra tax. Your argument is lets make it ever so slightly less sh*t. It needs to be scraped or at least only applied to clearly defined, select Life products.
Your crazy if you think that wealthy people pay Exit Tax. They do not. If you want to tax wealthy people then ......tax wealthy people. There is no point carving out a tiny slice of the tax code for extra taxes and hoping that wealthy people will be stupid enough or lazy enough to pay it.
Yes sorry I wasn't saying they were wealthy, it's what the headlines and opposition will be saying and what the government would need to counter. The opportunity for making reasoned arguments will be somewhat limited.
Agreed, I spend quite a bit of time on the sub and like it, I've seen you there helping people out. I didn't mean to seem critical of the members, I was just making the point that a fair chunk of the 47 submissions you mentioned have likely come from there, and any that I saw shared did not seem convincing.
As above, my point is it won't have anything to do with what you/I think, it is about how it will be spun.
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