Fianna Fáil’s General Election manifesto will include a number of measures to help savers including a substantial cut in DIRT tax and an increase in the tax free threshold for small investors.
Finance spokesperson Michael McGrath commented “Savers have got a very raw deal under this government. Minister Michael Noonan has increased the tax on the interest earned by savers by a massive 14% (from 27% to 41%). In addition, anyone with unearned income (deposit interest, rent, dividends etc) of greater than €5,000 has to pay an extra 4% PRSI on deposit interest bringing the total tax on interest earned to 45%. This is a punitive tax on people who have prudently saved money, which itself has already of course been taxed in full. Nearly €2bn has been collected in DIRT since 2011.
“The combination of tax and inflation means real returns for savers are now effectively nil. The rates offered on tax free products by the NTMA through An Post have been slashed under pressure from the banks. There has been no respite for savers looking for a decent return on their money.
“Savers have also been hit in other ways through the levy on their private pension funds, increased capital gains tax rates and the stifling of the credit union sector by government and find regulator. All in all, the Minister for Finance has made it increasingly difficult for families to put money aside for their future wellbeing.
“Fianna Fáil is committed to reforming and reducing the tax on savings and making it more attractive for people to put money aside. To achieve this, we will reduce the rate of DIRT from 41% to 33% over the lifetime of the next Dáil. This will cost €58 million annually when fully implemented. We will also exempt the first €100 of interest from DIRT which will be particular benefit to small savers.
“Fianna Fáil will also encourage small investors by doubling the tax free threshold for capital gains. Currently capital gains tax of 33% is payable on gains over €1,270. This low threshold means that individuals making a relatively modest return on their investments are brought in to the tax net.
“We believe it is vital to encourage people to make investments in areas other than property. By doubling the annual personal exemption threshold to €2,540, we will encourage a wider range of investments to be undertaken. The cost of this measure will be €7 million in a full year and will form part of a wider reform of capital gains tax to be unveiled as part of our campaign.
“Fianna Fáil will also help savers by the introduction of limits on charges by investment and pension funds. By limiting the Total Expense Ratio charged by funds we will be able to improve the net return that investors receive on the their investments.”