Will ISA's be coming to Ireland anytime soon?

nest egg said:
Nonsense, having an ISA means you don't need to concern yourself with the tax treatment of any instrument you have within it. That's the epitome of simplification and harmonization.
Click to expand...
I find it baffling how anyone could ever argue against making an ISA available in this country.

I've recently returned to Ireland from the UK. The saving and investment regime here is like something out of the stone age. Everything is more expensive, more complex, more bureaucratic, there's less choice and ridiculous rates of taxation. It's so bad I am actually questioning my decision to have bothered coming back at all.

The ISA is an incredible product and was life changing for me personally, allowing me to buy a house here in Ireland outright with cash. I would put my £20k into my ISA at the start of the tax year, pick my investments (huge choice and so cheap to transact). The platforms available are highly advanced and can essentially be set to auto pilot through contributions/reinvest returns/etc. There's no forms to fill out, no legal/financial advice needed, tiny fees, you don't have to worry about taxes, you just worry about allocating your capital. The ease of use and lack of friction in a massive intangible benefit.

The current investment climate here suits the government and some connected people. The fact that the government still haven't done anything about something as malicious as the 8 year deemed disposal rule tells you all you need to know about their priorities. If they can't even correct something as basic as that we've no hope for an ISA equivalent.
 
Raskolnikov said:
Not having a go at you personally, but even if this measure was formally announced by the government tomorrow, it would take years before a platform was built out and people started opening accounts.
Click to expand...
The accounts would be at EU level not government level.

One way to achieve this is by introducing a European savings standard – a standardised, EU-wide set of savings products with potential tax incentives for eligible products.
 
Something like the Pan-European Pension Product (PEPP) that was first spoken about back in 2013?


One of theses days someone is going to come in here and say 'Here's an EU Country that has a similar population to Ireland where the regulatory and compliance regimes are identical and here's a link to the savings products that are available in those markets with this tax regime and link to charges.'
 
Last edited:
Raskolnikov said:
I find it baffling how anyone could ever argue against making an ISA available in this country.
Click to expand...

I agree. Canada started what seems to be a similar product (TFSA Tax Free Savings Account) in 2009 I think. It’s not just for savings you can do what you want with your money in there and the interest / gain is tax free. It started at $5k per annum but is index linked. You got to roll over your cap so by the time I stared to save I had a good bit of room.

It really focused me on first saving but then on to making Index fund investments. There was no tax to worry about. I didn’t get to buy a house outright out of it but did okay.

I did also keep my emergency fund in there and used get to keep the 2% or 3% interest I would make.

I think the biggest benefit is actually in regards to getting people to think about saving and investing.

It seems a no brainer to me to try and encourage people to start saving for a house as soon as possible after they start working. I know it sounds bleak but that what I and many do.
 
Corola said:
The accounts would be at EU level not government level.

One way to achieve this is by introducing a European savings standard – a standardised, EU-wide set of savings products with potential tax incentives for eligible products.
Click to expand...
No, the standards would be agreed at EU level. But taxation is a member state competence, so for the standards actually to become applicable throughout the EU all 28 Member States would have to enact laws bringing their own tax codes into line with the standards. The accounts would still operate under national law, and would be taxed under national law.
Raskolnikov said:
I find it baffling how anyone could ever argue against making an ISA available in this country . . . The current investment climate here suits the government
Click to expand...
I think you've answered your own question there.

The biggest loser from the introduction of ISA-type arrangements would be the government — they'd lose tax revenue.

So far as I can recall, the only tax-favoured savings/investment account we ever had in this country was the Special Savings Incentive Account, introduced under Charle McCreevy in 2001. The deal was:
- The taxpayer committed to pay up to €254/month into the account for 12 months.
- The state would top this up by another 25%/month (a 20% tax credit, paid directly into the account)
- The account could be invested in deposits, or in equities or equity-linked securities
- After 5 years, the account matured and you could take out the contributions, tax credit and accumulated return. (From memory, you could uplift earlier, but you would lose the tax credit and associated return.)

It was a one-off, and hasn't been repeated. Takeup was widespread — something like 40% of the adult population had an SSIA. It would be interesting to know how much SSIA funding went into deposits and how much went into equties, but I haven't seen a breakdown of that.

I think what made it politically feasible was:

(a) the fact that the economy was booming, and there were concerns about overheating, and it was seen as a mechanism for dampening demand by encouraging more household saving; and

(b) the relatively low contribution limits (€254 x 12 = €3048) meant that it wasn't a scheme that delivered the bulk of its benefit to people with high disposable income who could save/invest signficant amounts — no matter how wealthy you were, you couldn't put more than €3048 into an SSIA, so it couldn't be a framed as a tax break largely for the already wealthy.
 
Last edited:
faketales said:
I think the biggest benefit is actually in regards to getting people to think about saving and investing.
Click to expand...
It really would kick off a virtuous circle.

Let's say we allowed people to contribute €5k a year as you suggested to an investment account where dividends/capital gains could accumulate tax free. All of a sudden all those people who have a combined €160bn in Irish bank accounts would be able to allocate a small part of their savings and have the ability to get a decent return. Giving small and young investors the opportunity to generate returns without eye watering taxes and red tape would significantly improve uptake. More uptake would mean there exists a greater pool of financial assets for providers to chase. Bigger pools of capital will invite more providers meaning we get lower fees, superior service and better choice. Greater interest and deeper pools of capital might even provider an incentive for our own Irish firms to seek an exchange listing.

You just need a finance minister in charge who can display a bit of vision and give the people who pay for the upkeep of this country the opportunity to have something nice for once.
 
Raskolnikov said:
Let's say we allowed people to contribute €5k a year as you suggested to an investment account where dividends/capital gains could accumulate tax free.
Click to expand...
People in employment can already do that and get a tax deduction at their marginal rate for doing so, which is a signficantly better deal. So you have to reckon that people who are motivated to save by tax incentives are already saving. I'm not so sure that this would be the gamechanger that you think.
 
TomEdison said:
The biggest loser from the introduction of ISA-type arrangements would be the government — they'd lose tax revenue.
Click to expand...
No they wouldn't because currently the money is not being invested anyway it's just sitting in deposit accounts or fueling the already over heated property market just like during celtic tiger. So the government is not losing out on tax revenue because the wealth is not being created for them to get tax from anyway. It is a very short sighted and brain dead policy .
Yes the ssia was such a scheme, however it was very limited just to deposits and then they terminated it prematurely allowing them to mature just in time for it to pour more fuel on the over heated celtic tiger property market. If they had of kept them in place or better still a proper isa it could have dampened the effects of the celtic tiger crash as people would have had some wealth outside of their crashing house prices and the negative equity.
 
TomEdison said:
People in employment can already do that and get a tax deduction at their marginal rate for doing so, which is a signficantly better deal. So you have to reckon that people who are motivated to save by tax incentives are already saving.
Click to expand...
When one start in life, the 30-40 years time frame is a disincentive. On top of it, with the diversity of products, it can seem quite complex. It took me years to realise that there were options other than buying an annuity because when I started contributing ARFs were limited. When one is younger, priorities are different: housing, childcare, children education as well as day to day living...
 
Last edited:
TomEdison said:
People in employment can already do that and get a tax deduction at their marginal rate for doing so, which is a signficantly better deal. So you have to reckon that people who are motivated to save by tax incentives are already saving. I'm not so sure that this would be the gamechanger that you think.
Click to expand...

I started investing via similar to an ISA in my early / mid 20s. I then used the money to help buy a house 10 years later. Not everything is about pensions.
 
nest egg said:
The ECB is making it's opinion known via this piece.
Click to expand...


ECB executive board members make a half a dozen speeches a year.

These (my eye anyway) are extremely carefully crafted to make the institutional view known in a public way. They don’t contain disclaimers the way the blog does.
 
@ClubMan , i think the wording is confusing in that link, I read it and my understanding was that 80% of people opted for the deposit form of the SSIA rather than the equity based products. The post was encouraging people to opt for the equity based products because of the superior long term performance of equities, Brendan made the point that people may be dissuaded from equities due to the recent dot com crash of the equity markets which dates it to the early 2000s. That was my reading of that link although I wasn't aware there was an equity option. Just shows you that the McCreevy government was ahead of its time given that 20 years later we further back now than we were then in terms of getting people to invest rationally.
 
You must log in or register to reply here.
Back
Top