Dáil Éireann Debate, Thursday - 13 November 2014
71. Deputy Terence Flanagan asked the Minister for Finance the measures he has introduced to encourage consumers to save and value thrift; his views on the DIRT tax rate; and if he will make a statement on the matter. [43532/14]
Amharc ar fhreagraIn recent years the DIRT rate has been increased to raise additional revenue, and all deposit interest is now liable to DIRT at a rate of 41%. Previous DIRT rates were below the higher rate of income tax, and this, in effect, incentivised saving. The decision to raise the rate of DIRT was taken to encourage spending in the economy with a view to stimulating growth and employment.
Certain exemptions apply from DIRT, the main ones include:
- Individuals aged over 65 (subject to income limits)
- Permanently Incapacitated Individuals
- Companies, Pension Funds and Charities (Irish resident companies pay tax on investment income at 25%)
- Non-Resident Account Holders
There are alternative savings products available which are tax free (Savings Bonds, Saving Certificates, Instalment Savings and the National Solidarity Bonds).
Over a longer term, pension savings are encouraged by the exemption from taxation at the marginal income tax rate of ongoing contributions by individuals (subject to annual limits which increase with age). Investment growth of pension savings are also tax exempt while pension benefits are taxed on drawdown at marginal rates subject to a tax-free retirement lump sum up to a life-time maximum of €200,000.
