The rate of tax on savings in Special Investment Accounts (SIAs) will rise from 10 per cent to 20 per cent from April 6th, 1999. The increase will bring the rate of Deposit Interest Retention Tax on this type of savings product into line with the 20 per cent rate on Special Savings Accounts (SSAs). The Minister for Finance has also raised the maximum amount of money that can be invested in SSAs from £50,000 to £75,000, the limit currently applied to SIAs. The changes will bring in £3 million net revenue to the Exchequer in a full year.
The proposal to double the rate of tax on savings in SIAs was strongly criticised by the Irish Association of Investment Managers (IAIM). Legislation requires 55 per cent of the total funds held in SIAs to be invested in Irish companies and as such incorporates an element of risk not association with monies lodged in an SSA account. IAIM secretary general, Ms Ann Fitzgerald, said the association will be seeking a meeting with the Minister and his officials to discuss what it believes is the inequitable tax treatment of this investment product.
"We would expect that with the advent of the euro, the Minister would have wanted to support and promote as much investment as possible in Irish companies. We are also surprised that in seeking to standardise tax rates regardless of risk profile, the Minister has not done the same in relation to the State's own investment vehicles which provide artificially high returns," Ms Fitzgerald said yesterday.