2026-04-21

237. Deputy Ged Nash asked the Tánaiste and Minister for Finance his plans for a new savings and investment scheme for retail investors; the estimated cost to the Exchequer in terms of tax foregone in the first five years of the new scheme under preparation; and if he will make a statement on the matter. [26421/26]

I ask the Minister to update the House on his plans for a new savings and investment scheme for retail investors and if he could enlighten the House as to what he anticipates the estimated cost to the Exchequer in terms of tax forgone in the first five years of the scheme might be, and if there is, in fact, an assessment already done on that basis.

I thank Deputy Nash very much. The starting point here, on which many of us agree, is that Ireland does not have a sufficiently diversified savings and investment culture. I am quite conscious that we are having this conversation against the backdrop of significant economic challenges for people right now. I fully get that. However, even against that backdrop, I am also quite conscious that there is a lot of money on deposit in Ireland today. Even this week people are putting relatively small amounts of money aside to try to build up their own buffers insofar as they can for the times ahead. A lot of them are in low-yield deposit accounts where inflation is eroding their value over time. That is just the truth. Deposit accounts are right for many people. I understand the role deposit accounts have to play, and for many will be their source for putting money by for a later date, but they should not be the only practical option. Investment in capital markets can offer households another path to long-term financial well-being. It can also support growth and competitiveness in the wider economy. I have announced the Government's intention to introduce a legislative framework for an investment account this year as part of the finance Bill. We want to make investment simpler, clearer and more accessible for ordinary people. We want to help to make some of their hard-earned money work harder for them over time. The aim is to legislate for the framework in 2026 to allow for accounts to be offered from 2027, but it will also be a key part of a broader rethink of the taxation of retail investment. I would welcome the views of Deputy Nash and others in relation to that. In recognition of the importance of encouraging retail investment, budget 2026 did provide for a reduction in the rate of taxation on returns from Irish and equivalent investment funds and Irish and certain foreign life assurance policies from 41% to 38%. In addition, the budget also included a commitment to publish a roadmap in 2026, setting out the intended approach to simplify and adapt the tax framework to encourage retail investment in future finance Bills. The roadmap will be published in the coming months in advance of the budget. It will take into consideration developments at an EU level in respect of a savings and investments union, including the recommendation on savings and investment accounts. The actual cost of this in the initial years will depend on the specific parameters of the account. That work is still ongoing and costs will be prepared as part of the budget process.

I welcome the debate on this. I accept that we need reform in this area. I have no difficulty with that. There has been a lot of focus on the deemed disposal rule. There is no doubt that how it operates is an anachronism and reform is needed. That should not sideline us from the need to develop alternative routes to allow people to plan for their future. I am glad the Tánaiste referred to the context of what people are experiencing at the moment. Investment is very much a minority sport. Most people are concerned with surviving and not how they are going to invest relatively substantial amounts that they have on deposit on schemes and accounts that may deliver more for them. I accept that this does need to be part of the solution in terms of preparing people for the future. Mention has been made by ourselves in the Labour Party, and by the other parties, of the need to develop some products that might enable Irish people to invest some of their hard-earned savings in, for example, housing development in Ireland and in assisting high-potential start-ups, and so on. Is that the kind of area that the Tánaiste expects people to be able to invest in at a reasonable rate?

I thank Deputy Nash for his comment on the deemed disposal rule. I agree that there is, rightly, a lot of debate in this House about the rate of it. He made the broader point about the purpose it serves - or does not serve - any more. We need to have a substantive examination of what the policy intent was and if it is still valid today. The truth is that I do not believe it is. How do we unwind that? Can we do it in one go - just take a number - and what is the roadmap? We need to come back and have a conversation around that. I fully accept the point about the cost of living. I am very conscious of it. I am also conscious that we are among the best savers in Europe. We talk about building up our own financial resilience. The country has to be able to help ordinary workers, as they are often referred to in this House - everyday people - to build up their own financial resilience as well. My intention, to be very honest, in the first instance is to set up as simple an account as possible to get this up and running. Many other European countries have done this. I have heard constructive ideas from Deputy Nash and others on whether this could be used to help to invest in start-ups or housing. That merits consideration. The question is whether we would do that in the first tranche or if we would just get an account up and running. I think we would just get it up and running in the first instance. I am also conscious that there are other savings bonds. The NTMA, for example, runs the prize bonds, etc. We can look at whether there is a way of overhauling that too. It is worthy of further exploration.

I understand that people are risk averse because people have been burnt before. There are always risks to investing. Any model or scheme that is developed has to be very clear on that. I understand why the Tánaiste might want to dip his toe in the water in a tentative fashion in the first instance, and then maybe move from there. The Tánaiste has been quoted as favouring the Swedish model. It is one that people will be familiar with. On the basis that he has an understanding of the Swedish model and his officials may be going in that direction, has any assessment been done at this point on the tax implications for the Exchequer on the tax expenditure side in terms of tax forgone? It would be relatively easy to come to some kind of a conclusion - at least on a desktop basis - as to what the implications would be if we were to introduce a very simple straightforward model like the Swedish one. The Tánaiste seems to be moving away from the UK ISA-type model. Could he put his thinking on that, and what is informing it, on the record? In the available time, could he also indicate what engagement he has had on this with the Central Bank and if it has been helpful in assisting the Department?

Yes, there has been very helpful engagement with the Central Bank. We held the savings and investment forum in the Central Bank. The Governor of the Central Bank opened the meeting, which was very useful. We want to take the feedback from that. The point about the tax forgone is something I am very conscious of. I do not have that information yet but once I have it, I will be very happy to share it at an early stage with Deputy Nash and with the House. Deputy Nash and I were in government together. I remember in my earlier days in the Oireachtas trying to copy the Dutch healthcare system. What I quickly learned is that the Irish people are not Dutch. The Irish people are not Swedish either. The Swedish model has many advantages. It is generally seen as best in class, but there is no off-the-shelf model, we will have to take what is best practice and adapt it for our own national culture and environment. The Swedish model is one we are looking at. The UK model is to be commended too but it does have a very high cash level that I think has a significant drag. I am not sure we necessarily want to replicate that element of it as well. We had a good forum with several hundred people from a whole variety of backgrounds. They fed in their views. I will be back to them with the next iteration. I am very happy - indeed eager - to have Opposition engagement on how to get this right in the times ahead.