Michael Noonan
Ceist:1 Mr. Noonan (Limerick East) asked the Minister for Finance the expected return from DIRT tax in 1990; and the interest rate premise on which it is based.
Ceisteanna—Questions. Oral Answers. - DIRT Tax.
It is estimated that the net yield from the deposit interest retention tax will be about £270 million in 1990. The reduction in the standard rate of income tax announced in the budget, which applies also to the deposit interest retention tax, is taken into account in this estimate.
The Deputy will be aware that the yield from the tax in any one year is effectively determined by the interest rates payable on the relevant deposit base over the 12 month period ending on 5 October of that year.
Accordingly, the 1990 estimate of yield is based, in the first instance, on information available to my Department about the interest rates and deposit base actually in place in the period from 6 October 1989 to budget day, 31 January 1990. For the subsequent period, the estimate uses the normal technical assumption for economic and budgetary calculations that there will be no change in the interest rates that applied at budget time. The assumption is, as I have indicated, a technical one and does not imply any policy stance as regards future movements in interest rates.
(Limerick East): I should like to thank the Minister for his reply. What effect, if any, does the Minister believe the changes in exchange controls announced yesterday will have on interst rates?
I do not anticipate that they will have any. They are very minor changes and more administrative than anything else. We do not anticipate that they will have any effect on interest rates.
(Limerick East): Has the Minister had any discussions, or is he planning any, with the banks to see if some arrangement can be arrived at so that they will not raise mortgage interest rates in April as they have signalled they intend to do?
The Deputy will appreciate that that is a separate question. The banks, and all the institutions except one that I am aware of, have signalled their intention to wait until April to see what money markets will do in the meantime. We will have to await developments in the money markets between this and then.