Taxation

Question 1

What is the purpose of a tax system?

Answer 1

• Rase tax for service needed by citizens
• Promote economic goals
• Social goals
• Promote prudent financial behaviour

Question 2

What are the 3 desirable traits of a tax system

Answer 2

Vertical equity, Neutrality (horizontal equity) and simplicity

Question 3

Vertical equity

Answer 3

Tax payer must contribute there fair share

Question 4

Neutrality / horizontal equity

Answer 4

Tax economically equivalent entities, products and services.

Question 5

Simplicity in the tax system

Answer 5

Cheap and easy to collect and is not easy for people to avoid

Question 6

What are the 2 types of tax systems?

Answer 6

Tax baces, Tax exemptions and deductions,

Question 7

Tax bases

Answer 7

Every systems must begin with a tax base usally income tax, consumption tax and wealth tax. The broader the better

Question 8

What are exemption deductions and credits used by regulators to do?

Answer 8

Modify the system

Question 9

How can tax be used as a tool?

Answer 9

Promote or discourage behaviours such as spending and investing

Question 10

How is lie insurance taxed?

Answer 10

Premiums, living benefits, death proceeds from life insurance, taxing the profits of insurance companies

Question 11

Is there tax relief available for premiums in Ireland?

Answer 11

No, but other countries do such as Germany, Japan and Belgium.

Question 12

Why doesn’t the Irish government offer tax breaks on life insurance premiums?

Answer 12

Because people dying is no longer as big of a social imperative as it once was. They would rather see people invest in pensions or long term care.

Question 13

What are living benefits

Answer 13

Payouts from a pension

Question 14

Are living benefits taxed and why?

Answer 14

No, because they are not investment income, they are repayments from overpaying for your premium

Question 15

How annuity payouts taxed?

Answer 15

They a taxed when they payout in terms of PAYE and USC. They are not texted in the way in

Question 16

What tax do you pay on an ARF?

Answer 16

PRSI and USC

Question 17

Do you pay tax on death proceeds from life insurance

Answer 17

No, if it’s under a certain amount (progressive) and is not paid into an estate

Question 18

What tax is paid on an ARF when you die?

Answer 18

Money goes back to family, with 30 % tax

Question 19

Who is responsible to pay the premium on taxes insured or insurer?

Answer 19

Insurer

Question 20

Why are insurance companies hard to tax?

Answer 20

Their profits are hard to calculate because insurance contracts are long.

Question 21

What is tax harmonisation

Answer 21

Where there would be universal tax laws across the EU.

Question 22

What would be the impact of increasing tax on insurance in Ireland due to tax harmonisation?

Answer 22

• Inefficient allocation of the worlds insurance capacity
• Cause insurers to leave Ireland
• Encourage consumers to seek insurance from suppliers in lower tax jurisdictions
• Encourage tax arbitration

Question 23

What are the 3 mechanisms of regulation?

Answer 23

Legislation, Judicial, Execuitive

Question 24

Legislative

Answer 24

The rule of society. They give clear guidance on how to be enforced

Question 25

Where do we see legislation in insurance?

Answer 25

Licencing, Brokers and agents, approval of insurance rates

Question 26

Judicial

Answer 26

The enforcement of the legislation

Question 27

What is the judicial used for in insurance?

Answer 27

Disputes against the insurer and insured

Question 28

Executive

Answer 28

Self-regulation through administrative officials who oversee the industry

Question 29

What is an example of executive regulation

Answer 29

Not using genetic test in life insurance

Question 30

What is quasi-legislative power

Answer 30

Executive regulation through broad administration

Question 31

What principle does the EU operate under for insurance legislation

Answer 31

Each state is free to regulate as it wished subject to full implementation

Question 32

Pan European pension product

Answer 32

A private pension that can be transferred across any EU county and any job

Question 33

Insurance distribution directive

Answer 33

An EU wide consumer protection code

Question 34

Pasporting

Answer 34

Selling insurance products across borders.

Question 35

What are the aims of EU directives

Answer 35

Create a single market

Question 36

If you want to write insurance across borders what do you need?

Answer 36

Permission from the host country