# Indexation



## oilean (26 Aug 2004)

I cannot find if this has been posted before but

Has the eradication of indexation, as from 31 December 2002, been one of the most unprotested tax hikes in recent years?

This will lead to massive revenues for the government in years to come

I am not saying it is unfair to have or not have
The point is it kind of slipped by in the main without major protest

Without indexation people will pay CGT (albeit reduced to 20%) on the difference between purchase price and sales price (give or tale some expenses)

Great trick by the government and by a minister for finance who is always slagged of for giving to the rich and taking from the poor

Stu


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## darag (26 Aug 2004)

hi oilean.  yes i did some calculations on the effect of that change at the time and posted a message here on this site.  among the things i found was that you need a return of over 1.2 (upto 1.25) times the rate of inflation in order for the value of your investment to stand still in real terms.  when mcgreevy introduced this measure,  inflation was running at 4% which meant that for many reasonable investment periods and rates of return, this change was equivalent to bumping up the cgt rate to 40% under the old rules.  this was a sneaky trick alright - if he had just raised the rate to 40% there would have been uproar.  he effectively did that but it seems to have escaped nearly everyone's attention.


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## Brendan Burgess (26 Aug 2004)

Hi Oilean

I raised this very point on Askaboutmoney and in the media immediately after the Budget, but it provoked no discussion. 

Don't forget, depositors never had indexation for their investments either, so it levelled the playing field. 

Brendan


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## Guest (26 Aug 2004)

There was some discussion about the abolition of CGT indexation relief post December 31st 2002 at the time it was introduced but not a huge amount if I recall correctly.


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