Sunday 20 October 2019

Savers to get small boost from cut to Dirt


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Kevin Doyle

Kevin Doyle

Savers are set for a boost in Budget 2019 - but it won't be anything close to the SSIA scheme which fuelled boom-time spending.

Finance Minister Paschal Donohoe is set to reduce the Deposit Interest Retention Tax (Dirt) by 2pc next year.

This will bring the rate down to 35pc on every euro in interest earned.

In recent weeks, Mr Donohoe said he would consider a new special savings scheme similar to the SSIA, but no moves will be made on this in the Budget.

He was responding to calls from the Governor of the Central Bank, Philip Lane, for workers to be encouraged to set money aside while the economy is growing.

The SSIA, which was set up by Bertie Ahern's Fianna Fáil government, gave savers €1 for every €4 they saved.

However, accounts matured between May 2006 and April 2007, leading many people to splurge shortly before the economy went into freefall.

Mr Donohoe indicated in last year's Budget that he would bring Dirt down to 33pc by 2020. It is currently 37pc but will drop to 35pc from January 1.

Ahead of next Tuesday's Budget, Brokers Ireland, which represents 1,250 financial broker firms, called on the Finance Minister to relink the rate of Exit tax on savings and the Dirt rate.

The so-called 'Exit rate' on life assurance-based savings stands at 41pc.

The body claimed the existing situation penalises savers who plan for the longer term and attempt to make a better return on their savings.

Savings products generally subject to Dirt as opposed to Exit tax have yielded little or no growth for several years.

Diarmuid Kelly, chief executive of Brokers Ireland, said good legislation should not steer people towards short-term savings solely because of preferential tax treatment.

"The tax regime should be neutral so that savers can invest according to their individual needs. Taxing people at a higher rate for making a more prudent investment just doesn't make sense," he said.

Irish Independent

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