Fianna Fáil Spokesperson on Finance Michael McGrath TD has slammed the Minister for Finance Michael Noonan for continuing to preside over a punitive tax regime for savers.
The current government has increased the tax on deposit savings by a massive 14% (from 27% to 41%). In addition anyone with unearned income (deposit interest, rent, dividends etc) of greater than €3,174 has to pay an addition 4% PRSI on deposit interest bringing the total tax on saving on to 45%.
Deputy McGrath commented “In delivering his Budget 2014 statement Minister Noonan made a commitment that Ireland would “play fair” in the conduct of its international tax policy. However the same does not apply to how it treats domestic tax payers. The Minister has massively increased tax on interest from savings. This is a punitive tax on people who have prudently saved money which itself has already 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 negative. By contrast in the UK, the first £1,000 of interest on savings is tax free. 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.
“It is very important to state that DIRT tax is applied in a discriminatory manner. Any single pensioner earning just over €18,000 (or €36,000 for a couple) is liable for DIRT at the full rate of 41% even if they are only subject to income tax at 20%. For low income families under 66 the situation is even worse. Low income earners who have put aside some savings pay the same rate of DIRT tax as millionaires.
“Savers have also been hit in other ways through the levy on their private pension funds, increased capital gains tax rates and the emasculation of the credit union sector. 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. Our manifesto for the General election will set out a clear path the deliver a fair tax regime for savers,” said Deputy McGrath.