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AIB HAS WELCOMED a new State-backed savings scheme but the Social Democrats have described it as a “tax break for millionaires”.
Tánaiste and Finance Minister Simon Harris today convened the first Annual Savings and Investment Forum.
He told the Forum that he hopes the new Personal Investment Account will be up and running next year.
Harris said there will be no entry or exit tax charged on investments made via the government account and that there would be a “flat rate of annual tax” on an amount “above a certain threshold”.
He did not say what that threshold will be. The details of this are expected to be ironed out as part of Budget 2027.
Harris today remarked that the Government needed to ensure there was a tax system “that’s helping people who are trying to build up their own economic resilience”.
“Irish people are doing their very best to put away small amounts of money on a regular basis,” said Harris.
“There are examples of grannies, parents, individuals doing that right across the country.
“But at the moment, despite people doing the right thing, that’s not earning any money, and it’ll be worth less to those grandkids when they go to withdraw it than it is when they put it in. That’s what we’re trying to fix here.”
AIB participated in today’s Forum and described the proposed scheme as a “valuable opportunity to strengthen the financial resilience and wellbeing of Irish consumers”.
Adrian Moynihan, Head of Consumer Banking at AIB noted that many Irish consumers have never invested before and remarked that a “simple and easy to understand Savings and Investment Account will be crucial to the future success of the initiative”.
He added that both “digital guidance and in-person advice” should be available in relation to the scheme and called for an “industry-backed financial education programme”.
Moynihan also welcomed the announcement that the Government will soon appoint a financial literacy ambassador for Ireland.
Elsewhere, EY Ireland said the “intention to modernise savings policy and incentivise individual investment is a really welcome step”.
Colin Ryan, EY Ireland Financial Services Country Lead, said the majority of household savings are “sitting in low-yield accounts that too often do not deliver significant returns”.
Ryan also welcomed that the scheme will seek to “mirror international best practice such as the Swedish ISK model”.
Under this scheme, zero tax is applied to income or gains arising from investments up to €28,000.
However, the Social Democrats has said that the proposed scheme “amounts to a tax break for millionaires” and that “ordinary people will pick up the bill for this handout to the rich”.
The party’s finance spokesperson, Cian O’Callaghan, today said that Harris and Fine Gael have “shown their true colours as they roll out their latest scheme to allow millionaires to dodge tax”.
“The rich and their accountants will make hay as they shift their investments around to make the most of this latest Government handout,” he added.
O’Callaghan said the cost of the scheme could “amount to billions over years” but that most people will “never see the benefits”.
“Families struggling to put food on the table; the pensioners afraid to turn the heating on; and the young people spending all their money on rent.
“They do not have the luxury of investing thousands into shares.
“They do not watch their bank balances grow while they sleep.
“They pay income tax on their hard work and are now expected to subsidise tax breaks for investors.”
O’Callaghan said that every euro “wasted on these tax cuts is a euro that could have been spent helping those that need it most”.
“There is a price to be paid for these tax cuts and people who genuinely need help will be picking up the bill,” said O’Callaghan.
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