Tax body 'missed opportunity' to remove controversial levy
HOPES of an early resolution to the life insurance levy row have been dashed after the Commission on Taxation failed to recommend any changes to the controversial tax.
But the Irish Insurance Federation (IIF) last night insisted its campaign to reform the blanket 1pc levy on life, pensions and investments sales would continue despite the setback.
The commission's report was the first chance for the Government to review the levy since it was introduced on August 1, despite the vociferous protests of IIF members who claim the levy is discriminatory and flies in the face of pensions' policy.
The IIF has continued to negotiate with the Department of Finance on the levy's reform, and several insurers have deferred passing the charge on to their members until the negotiations are concluded.
Many had hoped the Commission on Taxation would include more palatable proposals for raising income from the life insurance sector, in a move that would have improved the insurers' hand in negotiations with the Government.
"It would have been helpful if there had been some changes outlined in the Commission on Taxation report," a spokeswoman for the IIF said last night. She added, however, that "the IIF's main focus is on the ongoing discussions with the Department of Finance to find a more workable solution to issues surrounding the levy".
A spokesman for the Department of Finance confirmed that talks with the insurers were ongoing, but said he "couldn't comment" on the progress. The talks centre on agreeing a more acceptable way to raise income from the life insurance industry.
The Commission on Taxation marks the second missed opportunity to reform the levy after May's finance bill failed to yield any meaningful concession beyond a two-month delay in the levy's implementation. The next opportunity for reform is December's Budget.
Aside from the logistical challenges of introducing the levy, the IIF say it's unfair that their members have to pay a charge on investment policies when similar products sold by stockbrokers and other financials are not included. The IIF also opposes the pension levy.
- Laura Noonan
