The deemed disposal tax on unrealised gains for exchange-traded funds, ETFs, is simply madness. We often speak in this House about opportunity, fairness and giving people a real stake in our economy. We need to ask ourselves honestly what kind of Ireland we are shaping through our current tax system. Do we want an Ireland where ordinary workers can build wealth slowly and steadily over time, where someone on an average income with €100 or €200 he or she can put into a savings account a month can participate in the markets and benefit from long-term growth? Are we content with a system where real tax efficiency is saved for the few who can afford complex advice and sophisticated structures? At the moment, when it comes to ETF investing, that is the signal we are sending. If a young person decides to invest modest savings into a diversified fund and hold it for the long term, they can be taxed on gains they have not even realised. They have not sold, they have not received income, they may not have even seen a cent in their account, yet they face a tax charge simply because time has passed. That cuts across a basic principle that we have in this country, that is, we tax income or gains when they are actually realised.
It also undermines compounding, which is how ordinary people build security. It is how small, consistent investments over 20 or 30 years turn into something meaningful; a deposit, a cushion, a sense of independence. It is vital to say that, as I understand it, approximately €66 million a year is raised from the deemed disposal tax. The Government is leaving a lot of money on the table by not allowing people to compound over time and actually tax the gain when people are ready to realise it. Taxing an unrealised gain is an unfair principle. As we all know, the markets can go any way, any day and nobody knows the better but the reality is that people who are patient and wait for the long term are rewarded. If we are serious about broadening ownership, spreading opportunity and building long-term capital in this country, we cannot penalise patience and discipline. We have to remember that we are in a global competition when it comes to capital markets and with the opportunities that exist at the moment. It is important to highlight as well that young people primarily see the benefits of investing in a pension from a tax efficiency perspective. The problem is that not everybody wants to wait until they are 66 years old to draw down money or to avail of the money they have accumulated. They want to be able to live life as and when they need to. They never know when a crisis or an opportunity might arise whereby they need to access their money. I think people want to have that freedom to be able to do so.
A fairer system would reward long-term investment, as opposed to penalising it. It would treat people consistently and give every worker a genuine chance to accumulate. It is time to reform this rule and build an Ireland where ownership is not concentrated in the hands of a few but is shared more widely across society.