Economists Warn Tánaiste Simon Harris's Savings Scheme Favors Wealthy, Creates Tax Hole
Economists will warn an Oireachtas committee that Tánaiste Simon Harris's proposed personal investment account scheme could benefit wealthier households and weaken Ireland's tax base. They argue the plan is regressive and could disproportionately favor high earners and high-return investments. They suggest alternative models to balance incentives and avoid worsening inequality.
Economists from Trinity College Dublin and University College Dublin are set to warn an Oireachtas committee that Tánaiste Simon Harris's proposed personal investment account (PIA) scheme could favor wealthier households and create «another hole» in Ireland’s tax base.
The PIA aims to encourage savings into stocks and investments with a single flat-rate annual tax replacing existing charges like Capital Gains Tax. However, Enda Hargaden, assistant professor at UCD’s School of Economics, will argue the scheme is regressive, disproportionately benefiting higher earners and leaving those on the lowest incomes behind. He notes similar tax breaks already reduce State revenues by around €8 billion annually, stating the State should reduce, not add, such holes.
Barra Roantree, assistant professor in economics at Trinity College, will raise concerns about the scheme’s design, especially if it mirrors a Swedish model where investors pay a low annual tax on total investment value instead of profits. This approach could skew benefits towards investments with the highest returns, potentially resulting in higher relative taxes on low or negative returns, which is difficult to justify economically given that wealthy investors are more likely to earn high returns.
Both economists advocate for reform, suggesting alternative models like Norway’s, where low-return investments are not taxed, or changes to pension-style taxation, to balance incentives without increasing inequality. Harris’s proposal is part of a broader effort to boost Ireland’s «investment culture,» as households currently hold an estimated €170 billion in deposits.