DUBLIN, March 31 (Reuters) – Ireland plans to offer a new personal savings and investment scheme from next year to encourage people to invest some of the 170 billion euros ($196 billion) earning little or no interest on deposit with banks, Finance Minister Simon Harris said.
Harris, who is also the country’s deputy prime minister and leader of one of the two main coalition parties, has made the policy a top priority since taking on the finance brief four months ago and outlined further details of his plans on Tuesday.
The investment account is set to carry an annual flat-rate tax to the value of assets held in the account above a tax-free threshold, Harris said. The flat rate of tax could potentially serve as the sole form of taxation on investments made through the new account, he added.
“Ireland still does not have a sufficiently diversified savings and investment culture. Too much of people’s hard-earned savings remains in low-yield deposits, where inflation can erode value over time,” Harris told an event inviting feedback from industry and consumer representatives on the plans.
Ireland’s plans are aligned with the European Commission’s recommendation to develop consumer-friendly savings accounts, Harris said. About a third of the 33 trillion euros in private savings in the bloc is currently held in current accounts.
Irish households – who save around 1 euro of every 8 euros of their disposable income – hold just 2.3% of their financial assets in direct investments such as listed equity and debt securities, compared to the EU average of 7.5%, research by the central bank showed last year.
Irish Central Bank Governor Gabriel Makhlouf said on Tuesday that he was heartened by the efforts to reduce barriers to retail investment and that the availability of suitable products had to be accompanied by steps to improve financial literacy and a strong consumer protection framework.
($1 = 0.8679 euros)
(Reporting by Padraic Halpin; Editing by Sharon Singleton)
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