Phil Hogan
Question:71 Mr. Hogan asked the Minister for Finance if he will outline the likely impact of the changes made in deposit interest retention tax in the Finance Act, 1992; and if he will make a statement on the matter.
Written Answers. - Deposit Interest Retention Tax.
The revised DIRT arrangements contained in the 1992 Finance Act were designed to avoid a situation whereby funds would leave this country after the abolition of exchange controls, which must take place before the end of this year. Such an outflow of funds would create upward pressure on interest rates with serious consequences for levels of economic activity and employment. A secondary objective is, of course, to preserve to the fullest extent possible in the circumstances the revenue the Exchequer receives from DIRT. In the absence of the specific measures to be introduced, it should be clear that there would be a major erosion of the taxbase in this area, with obvious adverse implications for revenue. The revised DIRT arrangements, especially the 10 per cent DIRT on the interest on money deposited in a Special Savings Account, will act as a substantial incentive for people to keep their savings in this country, thereby minimising the unavoidable negative impact on revenues resulting from capital liberalisation. The revised DIRT provisions will not affect the 1992 revenue from DIRT.