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FINANCE MINISTER MICHAEL Noonan has confirmed an increase in the rate of annual DIRT tax applied to savings interest, from 33 per cent to 41 per cent.
It means those saving money will have to hand €41 back to the state for every €100 in interest they accrue.
Aimed at convincing people to spend money rather than sit on large sums, the move has been criticised by accountants Grant Thornton — which says is may encourage people to try and evade the payment:
“The DIRT tax on savings has now gone from 20 per cent to 41 per cent in a short period of time,” partner with the firm Peter Vale said.
“Whilst the move may encourage people to stop hoarding cash and invest in more productive assets, it also increases the likelihood of greater non compliance in terms of returning details of interest income to Revenue.”
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Time to take my savings out of the bank and stick it under my mattress.
You must be loaded.
Kerry Hope you dont bang your head of the ceiling
So… better to earn 0% than 59% of the interest…?
Gotta love the “cut off the nose to spite the face play”, that ought to show the Government who’s in charge here!
Not loaded have been saving to fund my kids attendance to 3rd level education hopefully. See no reason why the state should get additional tax on money I have already had taxed.
They’re not taxing the money you’ve already payed tax on – you’re paying tax on the interest. But go ahead, earn 0% under the bed.
Kerry they aren’t taxing.your savings they are taxing the interest your savings earn.
You show them Kerry, stick it under the mattress where it will earn nothing instead of keeping in the bank where it will earn something! Watch out for those burglars and check your insurance policy covers cash under the mattress!!
So that’s 41% of the 0.01% interest my bank gives me on what little money I keep in my bank account…
Meh.
I wonder if the rate of interest on state savings has been revised downwards in tandem. If not, I feel a challenge by the banks on the grounds of unfair state aid brewing …
Dusty. That wills fall. Just like last time. State savings was 10% over 3 years in August 2012. After the budget brought DIRT to 33% they lowered the rate to 7% and then, currently, to 4%.
believe it or not, its actually important for an economy for people to have savings, what are they thinking? Combine that with the risk of savings confiscations in the future and I can see mattress money becoming more popular
At the minute though it’s actually important for the state to encourage people to spend in order to stimulate the domestic economy.
And risk of savings confiscations? What does that mean exactly.
@ Ignoreland , it depends, if everyone spent their savings now the banks would run out of capital and most of the money would fly out of the country on imports so it would be a very short term hit, what happens next year? or a flat screen TV this year could be an electricity bill next year.
Think Cyprus, an Irish bank is a risky proposition for Irish people, now “they” are saying leave the money in a risky bank for no return.
Silverharp, deposits are guaranteed up to 100k. If you have more than that there is a small risk of loosing a percentage of anything over 100k. More chance of it being robbed from your house if you kept it there though.
What would cause people to flee Ireland would be if they were to tax or levy deposits- which is what Cyprus did- as distinct from the interest on those deposits.
it still adds to it being a disincentive to save, if you are not allowed earn interest then its only a hop skip and a jump to creating a “solidarity tax” on deposits or not refunding depositors fully if the Irish banks go tits up again. as it is it just seems to be a sneaky way to tax pensioners who on the whole are good savers.
I’m not disputing that it’s a disincentive to save. What I am saying, however, is that it’s not such a huge disincentive to save as to cause a run on the banks.
@Ignoreland , it wont cause a run but it is a chipping away of confidence. I remember one of my relatives who passed away in the 80′s, we found 50K punts in the house , thats the kind of thing that happens when the state overreaches its moral if not legal authority
I’d advise old people to cash in their savings , buy gold coins and think of their dutiful nieces and nephews ;-) otherwise the gov via the HSE or otherwise will just nick it anyway.
Just to try and make this clearer.
For example if you have €100,000 in the bank at a 2% interest rate. You will earn €2000 in interest over the year.
The €2000 will then be subject to 41% tax which means the government will collect €820 in tax from the interest gained.
Your net interest gain will then be €1180 after (DIRT) tax is deducted
They are not taxing the full deposit amount only the interest gained.
It’s a joke but that’s how it works.
Any gain is better than no gain I suppose.
I agree, there are a lot of people overreacting here. The concept of taxing interest certainly isn’t new.
It’s the OAPs that depend on their Deposit Interest as an income that I am worried about.
Seeing as both SF and FF had increases in DIRT penned into their budgets I’m sure their supporters are all happy today.
Thieving bastards
Here in Canada, bank interest is dealt with as income. You get a slip from the bank, declare it on your return at the end of the year and pay at the marginal rate. I’d be okay with a *withholding tax* of 41pc as long as low-medium earners could then get their overpayment back. Instead there are these ridiculous “exemptions” that people have to bow and scrape for.
Where is the cut in almost one billion per year (including interest) in Irish Aid?
Why dont the government target the 41% at those who have larger sums in the banks
For somebody that has a few thousand 41% is extremely large amount
It’s not 41% of the money saved. It’s 41% of the interest generated from the money saved.
So someone with €3000 in an account that has interest of 3% per annum is paying DIRT of €37 when the 41% rate comes into effect (€3000 x 3% = €90. €90 x 41% = €37)
That wouldn’t be fair either Philip.
Lets say you are a saver and you have a deposit account of €10,000.
I on the other hand haven’t saved anymore than €1,000. But we are both on the same income per year.
Why then, should you be punished for saving, by virtue of the fact you have a larger amount?
Disgusting, a 1% tax on interest savings would be immortal, never mind 41%
This is just to make people spend . For those with cash in the bank the may have to invest in property or risk loosing it in tax . Next year houses will be selling and the country will look like its booming …. but it won’t be it will just be a false picture . Stupid .
They could always spend it on things OUTSIDE of Ireland too.Its proably cheaper and easier to buy better quality stuff outside the ROI in the EU and bring it in ,even paying freight costs ,than being shafted for 3rd rate shoddy ,most basic line stuff for sale in Ireland.
Good move Baldy…
Isn’t it safer and more beneficial to keep your money under your mattress or in an old sock behind the wardrobe in the spare room?
Nope, it’s safer and more beneficial to spend it on coke ‘n hookers …
Where do you live Angela? joking
I assume that means Exit Tax has gone to 45%?
Tax on interest which is income is just a fairly standard principle of capitalism. Just like making a investment, if it is a bad investment , you lose your money. No wait that can’t be right ?
What little savings I have are being eaten away since USC was introduced.
have your say