Sunday 25 September 2016

1985 State Papers: Hint about Dirt tax from 30 years ago

Chris Parkin

Published 31/12/2015 | 02:30

In planning for the 1985 Budget, there was talk about what was then referred to as the 'bank tax', with advice by a team of experts that included Patrick Honohan, who decades later was appointed governor of the Central Bank. Photo: Tom Burke
In planning for the 1985 Budget, there was talk about what was then referred to as the 'bank tax', with advice by a team of experts that included Patrick Honohan, who decades later was appointed governor of the Central Bank. Photo: Tom Burke

The first hints were dropped 30 years ago about the controversial Deposit Interest Retention (Dirt) tax on savings.

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In planning for the 1985 Budget, there was talk about what was then referred to as the 'bank tax', with advice by a team of experts that included Patrick Honohan, who decades later was appointed governor of the Central Bank.

Dirt's subsequent arrival followed a long period of concern over the amount of funds finding their way to the exchequer in relation to interest that was being earned on bank accounts.

The outcome was that banks and other financial institutions soon afterwards began deducting Dirt at source. Advisors expected that the move would result in a substantial increase in tax yield in the first year of its operation.

Around £20m or more in the opening 12 months was forecast for the official coffers.

Further reports on the 1985 Budget plan confirmed what will come as no surprise to Leo Varadkar, or thousands of patients - that the financial problems of the health service are nothing new.

The documents confirm that conditions 30 years ago were much the same as they are today.

In 1985, officials were warning, in the approaching 12 months, that hospitals were facing steep reductions in spending - or even closure.

A memorandum, prepared for the cabinet by the Department of Health, listed up to 15 hospitals facing the chop, with a further seven confronting substantial reductions in their expenditure.

Irish Independent

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