Savings-tax windfall for State as we stash our cash
SMALL wonder that Finance Minister Brian Lenihan has continually rushed out to guarantee the savings of Irish people -- the Government is pocketing four times as much tax from our savings as it did during the boom years.
Last year, Irish people paid about €614m in tax on the interest earned on their savings. Back in the Celtic Tiger heyday of 2005, however, savers only paid €167.1m in tax, according to the latest figures from the Revenue Commissioners.
With the recession prompting more of us to squirrel away money, 2010 could be another bumper year for savings tax.
In the first two months of this year, we had already paid about €123m in tax on our savings -- almost as much as was paid in 2005 alone.
Despite the windfall being made by the State on our savings, almost 1.7 million workers are losing out on valuable flat-rate tax allowances they are entitled to. Only 323,000 pay-as-you-earn (PAYE) workers -- about one in six of all workers -- claimed their flat-rate allowance last year.
This annual allowance, which can be used to cover an employee's expenses, can help to put as much as €2,746 a year back into an employee's pocket.
Irish people are saving about 11 per cent of their disposable income -- almost four times as much as they did during the boom years, according to a recent study by the UCD Smurfit Graduate Business School and the Marketing Institute of Ireland.