Subscribe
Two weeks out from the announcement of Budget 2027, the Tánaiste and Minister for Finance, Simon Harris shows a Government arguing with itself over a tax he himself has said should go. That last stage pivot on an issue which Harris has been vocal on throughout the year suggests that Budget 2027 will be harsher than expected. On his Substack, the Tánaiste wrote “we can never mortgage our children’s future. Help with the here and now while planning for the decades ahead is key.” With prior promises of a generous cost of living tax package, the Government’s rhetoric is gearing up to submit another frugal budget. Perhaps the €640 million overspend by the Department of Education which has forced spending cuts throughout Ireland’s administrative bureaucracy is looming large in their minds? There is a long tradition of the Government promising tax cuts or cost of living packages only to recall and deny them when the cheque comes due, no better example shows that trend than Fine Gael’s backtracking on abolishing the Universal Social Charge.
On the 6th of October, Simon Harris will deliver his first budget as Minister for Finance since taking the reins from his colleague Pascal Donohoe who resigned from Government to work at the World Bank. If Harris’ recent comments on deemed disposal are any guide, the Government is preparing to backtrack wholesale after he has spent months making the very arguments that will be used against him. On September 24th when asked about how deemed disposal will intersect with his new Personal Investment Accounts, Harris said “we need to move beyond deemed disposal.” That much is true, but his further comments are illustrative of the tight pivot on the budgetary purse strings about to be made by the Government. As deemed disposal was an anti-tax avoidance measure, Harris said, “it would be important to replace it.” Furthermore, he added that “how much we can do in this budget will depend on the overall tax package and competing priorities.” Though he expects to make “some progress” on deemed disposal, the Tánaiste’s comments indicate that deemed disposal, despite speaking on it for so long, is no longer an issue in his books.
For a Minister for Finance looking to get Irish people to invest their savings, this decision to take deemed disposal off the list of priorities for reforming the retail investment sector in Ireland demonstrates a profound lack of understanding of the issues it poses.
Deemed disposal is impossible to defend. It actively dissuades retail investors and derails compound interest growth on investments. If a person were to put their money into an exchange-traded fund, every eight years the Revenue Commissioners will take a 38 percent tax off your unrealised gains even if you did not sell. Effectively, deemed disposal treats every retail investor in Ireland as a potential tax dodger, and seeks to bite into profits prematurely at a rate higher than the standard 33 percent capital gains tax.
To demonstrate how unfathomingly stupid deemed disposal is, it was originally introduced by former Finance Minister Brian Cowen to counter a specific tax avoidance practice identified by the Irish tax authorities which saw some life assurance policies rolled over without tax being taken. So deemed disposal was never created to tax ETFs to begin with, but the rhetoric that it is an anti-tax avoidance measure has remained constant. An archaic taxation rule designed to address a specific issue has ruined retail investing in Ireland, and its decadeslong consequences lead to dearth in Irish retail investing while savers across the European Union readily invest in Irish domiciled ETFs.
In 2025, the Government estimated that the removal of deemed disposal would cost the Exchequer only €142 million in annual revenue. Considering the backward nature of the tax, how it damages compound interest, and that investments sold will inevitably be hit with capital gains tax upon their sale, there is a convincing argument to be made that the Government could generate a higher sum in long-term revenue without deemed disposal. Yet despite how much Irish politicians like Simon Harris like to speak about long-term decision-making their horizons are remarkably short.
The Tánaiste has rightfully criticised deemed disposal frequently, it only disadvantages retail investors and is a serious barrier to creating an investment culture in Ireland. In February he told his parliamentary party that Ireland was “laggards at a European level” on investment, and promised that encouraging saving and investing would be an “absolute priority” in his budgets as Finance Minister. The Government knows deemed disposal is a problem, and for that reason they previously reduced the tax on deemed disposal from 42 percent to 38 percent. However, that 38 percent, sitting 5 percent above capital gains tax, is not a solution at all.
Earlier this month, September 6, Junior Finance Minister Robert Troy argued that deemed disposal was “from a bygone era” and that the creation of any new investment accounts would require its removal. Though we have official confirmation now that the Savings and Investment Accounts will be exempt from deemed disposal, a review of the tax itself has been pushed out to Budget 2028 and beyond. No doubt this will have disappointed retail investors in Ireland, who are faced with an incomprehensibly incompetent rule found nowhere else in the European Union.
And so it is that the Tánaiste has held three different positions on deemed disposal alone in the past six months, ranging from the tax is indefensible, it can wait, and “some progress” might be made. The only fact that remains constant under his leadership of the Department of Finance is that controversy and upset are guaranteed to come from any of his withheld promises. Harris has been routinely recognised by media and political figures as the kind of politician who likes to announce an idea before he has begun the work to turn it into public policy. Now it seems like, on deemed disposal at least, Harris is learning that such an attitude is particularly foolish to hold as Finance Minister.
The Finance Minister has made it his goal to create an investment culture in Ireland, an objectively positive thing; but his indecisive dithering over a €142 million cost to the Exchequer that is absolutely needed to remove deemed disposal and achieve his aim will undoubtedly draw the ire of the retail investment industry and the very people he has spent the last year appeasing with his political rhetoric on investment. For a cost so low that would create objectively positive financial returns and political points for the Government, there is no other conclusion one can come to than a mixture of incompetence with the possibility of a frugal budget.
The solution to his dilemma is to turn the new Savings and Investment Accounts into a two-tier investment system. That in and of itself is not an issue, advantageous tax treatment including the removal of deemed disposal on the accounts, is absolutely necessary to grow the retail investment sector in Ireland and unlock growth opportunities for Irish peoples’ savings. The fundamental problem is that Harris expects his accounts to become the vehicle for investing in Ireland rather than just one among many options. That itself is bound to create problems further down the road as investors with assets and ETF holdings outside the SIAs find themselves unfairly treated by State taxation policies.
It is stereotypical of the Irish Government to make an issue out of thin air and to dogwhistle about said very problem. Deemed disposal represents exactly that, and for a fraction of a percentage of the State’s budget they could remove it for financial and political reward in the long-run. The fact that they will not do so poses even further questions about the nature of this budget and the unsaid fiscal outlook of the Government.