The proposed new exit tax on life assurance funds announced in the Budget, 22 per cent standard rate plus 3 per cent at encashment or maturity, has been criticised by the Irish Insurance Federation (IIF). Two different systems currently exist for taxing the investment returns of policyholders of life assurance companies and investors in collective funds. In Budget 2000, the Minister for Finance, Mr McCreevy, announced the introduction of a common system across the board on the lines of the present system operating at the IFSC.

IIF chief executive, Mr Michael Kemp, said "the proposed exit tax to apply from 2001 represents a sea-change in the way domestic life funds are taxed." The IIF does not object in principle to the regime proposed, but believes there should be detailed consultation prior to the Finance Bill.