The main focus in yesterday’s announcement on investment taxation from Minister for Finance, Simon Harris, was on some further details of the new accounts which are designed to allow people to invest more easily in the stock market. Despite Harris first announcing his intention to launch the scheme in February, crucial detail on investment limits and tax arrangements is still awaited.However, yesterday’s announcement is also significant for a commitment made by Harris to lower level of taxation on retail investments in general. It is made clear that this is not an issue for this year’s budget, but it is an important statement of intent nonetheless. And it comes alongside promises by senior ministers to examine another area of capital taxation – inheritance tax – with a view to easing the burden in some areas.Some vital pieces of context are missing here. They are the Government’s wider intentions towards the taxation of capital and how it fits in with tax charged in other areas – notably income. The strong influx of corporation tax in recent years has allowed successive administrations to ignore the key trade-offs and the need, before too long, for the State either to raise more tax or cut spending elsewhere to pay for the costs of an ageing population. In this context, hollowing out the tax base further by reducing capital taxes in a random fashion is not a good idea. There are, of course, legitimate issues to be considered and areas where reform is appropriate. Ireland’s investment regime discourages small investors and the so-called deemed disposal rule penalises investments in some funds. The administrative complexity facing people who would prefer to put some savings into shares, rather than low-yielding bank accounts, is considerable.However, the Government also needs to consider the wider picture in relation to taxes on capital. For example, there may be aspects of inheritance tax which are unfair and need reform, but in general it is an efficient way of taxing wealth and the goal should be to collect more revenue, not less. It is reasonable to ask, for example, why someone getting an inheritance should pay less in tax than if they earned that money. To examine the hugely generous reliefs which apply to agricultural land and business assets. And to recognise that the Irish tax system is particularly generous in its treatment of housing, not only in terms of capital gains and inheritance, but also the modest level of the Local Property Tax, which had been meant to increase over time along with house prices, but is now basically a kind of fixed charge.This is not an argument for higher taxes for the sake of it. But Government policy needs to recognise the longer-term challenges ahead in developing a fairer and more efficient tax structure. An already-shrinking tax base needs to be widened, not narrowed further.