Tax changes that would encourage people to invest more of their savings would hopefully be made in the next budget, Tánaiste and Minister for Finance Simon Harris has said.
The Fine Gael leader said he is keen to push reforms that would see the creation of new saving and investment options for people “who are trying to put away a few bob at the end of the week,” rather than the “uber wealthy”.
The Republic’s existing tax rules has been criticised for acting as a barrier, keeping people from putting their savings into products and schemes where they would potentially earn higher returns.
The Government is examining possible reforms to make it easier for people to invest money that would otherwise be sitting in deposit accounts.
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Speaking on Monday, Harris said there were complex tax issues that would need to be worked out. Another problem was the fact Irish banks did not really offer investment options for “retail” customers at present.
[ A new savings scheme for Ireland’s ‘middle classes’: Here’s what we know so farOpens in new window ]
The Minister said his department would first draft a retail investment strategy, setting out the “principles” of a new savings scheme aimed at the middle class. “I’d like to be able to do that early this year,” he said.
The Government would then discuss the idea with the banks, other stakeholders, and the Central Bank of Ireland.
Harris said he hoped to introduce necessary legislative changes in the next Finance Bill, the law that gives effect to new budget measures.
Harris said the envisaged new savings products would benefit people putting money away for their future, a rainy-day fund, their children’s future, or people who were saving up a deposit for a house.
“I’m talking about people who are not uber wealthy by any manner or means, but people who are trying to put away a few bob at the end of the week, at the end of the month,” he said.
“At the moment, quite frankly they’re locked out of any meaningful participation in the investment scenario in Ireland. Locked out by complexity, locked out by tax rules, locked out by level of, amount you’d have to invest to be able to benefit in any sort of meaningful way,” he said.
Harris was speaking to reporters in Brussels, where he was attending a Eurogroup meeting of EU finance ministers.
Separately, Harris is expected to bring a memo to Cabinet shortly setting out his “proposed direction of travel” for the future of the top Central Bank governor’s job. Gabriel Makhlouf’s current term as Central Bank governor comes to an end in August.
Makhlouf recently sidestepped questions about whether he hoped to secure a second term heading the State’s financial regulator. “I think the current governor of the Central Bank is doing an excellent job,” Harris said.
“What happens next will be matters that will be considered by Government in due course. I’m conscious his term of office is up in a number of months, and I hope to bring clarity to this in the next few weeks,” he said.
