DIRT

dnme

Can anyone here make a case for DIRT?

Personally it makes me seethe with anger. It is punishing good prudent behaviour. If the government want to get people spending, take that insane immoral and in my opinion illegal bank exposure off our shoulders and then give people the opportunity to work.

I've never understood the notion of taxing savings interest. Savings that come out of income that has already been heavily taxed. In recent years, I have been all over the income spectrum, from being unemployed to employed. I have been hit every way imaginable like most others. Recently I have been lucky enough to return to work and now save albeit modestly and here I am being hammered again. I just consider it the straw I guess. I'm amazed that their isn't more anger that it is now gone to 41%. What that effectively means is that any deposit offering you see advertised, you can more or less halve it now.

Stheno

They are simply trying to manipulate how people spend their money, it's economics 101 make it punitive for people to save and they will look at alternatives such as spending or saving offshore.

Spending will stimulate domestic recovery, moving offshore depending on how much will incur more penalties.

dnme

Stheno wrote: »

They are simply trying to manipulate how people spend their money, it's economics 101 make it punitive for people to save and they will look at alternatives such as spending or saving offshore.

Spending will stimulate domestic recovery, moving offshore depending on how much will incur more penalties.

Yes I understand that, thus my line above "If the government want to get people spending, take that insane immoral and in my opinion illegal bank exposure off our shoulders and then give people the opportunity to work."

I guess, what I am getting at, is why is there not more anger? Hoe do people feel about such a high rate on such a tax?

Liam D Ferguson

Yup it's a double taxation. I also believe that as a mechanism to encourage people to spend more, it won't work. People save money to have the security of knowing that they have a nest egg tucked away for emergencies and non-standard expenses that pop up from time to time. Just because there will be more DIRT tax payable won't make me think "Oh I know I'll dip into my rainy day savings and buy some stuff."

That said, while the figure of 45% (including 4% PRSI) is very high, in the context of the very low interest rates of the moment, it won't make a huge financial difference unless you've got a lot of savings. If you have €25,000 on deposit and you're getting 2% interest, that's €500 interest per year. DIRT tax with PRSI has gone up by 12% from 33% to 45%. So that's an extra €60 per year DIRT tax on your savings. Not welcome, but some of the other measures will hit you by a lot more than €60.

Scortho

Stheno wrote: »

They are simply trying to manipulate how people spend their money, it's economics 101 make it punitive for people to save and they will look at alternatives such as spending or saving offshore.

Spending will stimulate domestic recovery, moving offshore depending on how much will incur more penalties.

Surely if you move savings to a bank account outside ireland you're liable for dirt still.

snubbleste

What are you on about 41%
It's 41% + 4% prsi from 1 January = 45%

Noonan said that people have too much savings and he wants that money flowing into local businesses, create jobs blah blah blah

Liam D Ferguson

snubbleste wrote: »

What are you on about 41%
It's 41% + 4% prsi from 1 January = 45%

Noonan said that people have too much savings and he wants that money flowing into local businesses, create jobs blah blah blah

Still wading through the detail, but didn't the 41% DIRT rate replace the PRSI on interest? I could be wrong on that.

dnme

Scortho wrote: »

Surely if you move savings to a bank account outside ireland you're liable for dirt still.

I don't think many would move deposits out of the country cos then you are taking on the gamble of currency rates, and in some cases the real security of your money.

JTMan

Liam D Ferguson wrote: »

Still wading through the detail, but didn't the 41% DIRT rate replace the PRSI on interest? I could be wrong on that.

Yesterday, Noonan implied that DIRT was the only liability. Today, he indicated that both DIRT and PRSI will be applied to deposit interest.

Hence, the effective deposit interest tax rate, for most people, is 45% from 1 January 2014.

No news on how the government will collect the PRSI.

mountai

How dare anyone be prudent in this day and age. All you foolish people , you deserve your little "Pots" to be raided so that our Political Masters may continue to ride the self serving gravy train that they are riding on . As for "Encouraging a spirit of enterprise"?? . Just go ahead like some of us did, risk everything , stick your neck out and establish a business , and then , ---- Be unpaid skivvies to the state by having endless reams of Red Tape to cope with. Spend huge amounts of time, returning all sorts of Taxes and Levies to Revenue so they can hound you with massive Fines and penalties if you are a few days late. Make sure that you keep Exact Expense account records , just like the Master Classes in the Dail, and if, and when ,you are caught out fiddling , just shrug your shoulder and laugh , because there will be No Consequences for you, Just like THEM.

And after all the years of hard work , prudent saving, watch as your Pension Funds are decimated , and you are told "Market Conditions" . Yes of course you will suffer just like the Lads in The Dail , where their Obscene levels of pensions are State guaranteed. Not only do they pay themselves these huge amounts when their time as Ministers are up, but are in full receipt of current salaries if still serving. Then when the downturn comes , watch as you are told "Because you are Self Employed" there is" Nothing for You." If you eventually get to Retirement age, you will have to wait an extra year to draw down the state pension because you are told the same thing. Thanks be to God , its all behind me. I have advised all my children to get out of this ****e Country , where hard work, deacent and prudent living count for NOTHING.

JTMan

Scortho wrote: »

Surely if you move savings to a bank account outside ireland you're liable for dirt still.

Depends.

If you move your money to an EU bank account, and you are an Irish resident, then, yes, you are liable for DIRT and PRSI via declaring your deposit interest to the Revenue.

If you move your money to a non-EU bank you are liable to pay tax at the marginal rate of tax.

Moving your money abroad, while perfectly legal, is complex for non-residents, may give you FX risk if the deposit is non-EUR and is often is subject to a lower deposit rate.

Liam D Ferguson

Fungus wrote: »

Yesterday, Noonan implied that DIRT was the only liability. Today, he indicated that both DIRT and PRSI will be applied to deposit interest.

Hence, the effective deposit interest tax rate, for most people, is 45% from 1 January 2014.

Thanks. I've updated my earlier example.

Fungus wrote: »

If you move your money to an EU bank account, and you are an Irish resident, then, yes, you are liable for DIRT and PRSI via declaring your deposit interest to the Revenue.

If you move your money to a non-EU bank you are liable to pay tax at the marginal rate of tax.

So in theory there's a potential tax saving for lower-rate taxpayers to move their deposits into a non-EU bank. But unless the amount on deposit is sizeable, the saving might not justify the extra work.

Possible opportunity for a non-EU bank to open an "Irish desk" and make it nice and easy.

Browney7

Liam D Ferguson wrote: »

Thanks. I've updated my earlier example.



So in theory there's a potential tax saving for lower-rate taxpayers to move their deposits into a non-EU bank. But unless the amount on deposit is sizeable, the saving might not justify the extra work.

Possible opportunity for a non-EU bank to open an "Irish desk" and make it nice and easy.

Pretty sure DIRT for PAYE workers is 41% self assessed tax payers always paid/should have paid PRSI as well to the best of my knowledge. Read an article before the budget that the banks were lobbying to not have to collect PRSI

JTMan

But unless the amount on deposit is sizeable, the saving might not justify the extra work.

Possible opportunity for a non-EU bank to open an "Irish desk" and make it nice and easy.

The FX risk and potentially lower gross deposit rate are also factors. Also, very few non-EU banks will accept EU resident account openings. Also, I think USC might also apply to non-EU deposit interest (correct me if I am wrong). In a nutshell, there a lot of hoops to jump through.

Browney7 wrote: »

Pretty sure DIRT for PAYE workers is 41%

DIRT is 41% regardless of whether you have PAYE income or not.

PAYE is a red herring here.

Browney7 wrote: »

self assessed tax payers always paid/should have paid PRSI as well to the best of my knowledge.

Pre-1 January 2014, there is no PRSI liability on deposit interest. Nobody 'should have' paid it.

imitation

Im now looking at alternative ways to save, seems like anpost still have dirt free stuff altough its locked up for a while. Id like to try shares but I dont think the amount i can invest is worth the hassle and tax liabilty and accountant cost.

I also dont like the mentality of killing savings completely which the last two governments have gone at with gusto to get out of this hole. Dirt shouldnt apply on the first 5k imo, it would at least incourage people to keep a safety net and cushion against short term hardship. Instead people are encouraged into a credit card lifestyle, so if they are laid off they get landed right in it, not to mention vunerabilty to dole cuts etc etc.

dnme

I absolutely cannot see the conventional argument playing out here. I simply cannot see people deciding to take their savings out and spend them because there is tax on the interest. I would need to see studies and empirical evidence to show that taxing savings interest affects and alters behavior. If anyone can show me any studies, or stats on this I'd be very interested.

Until then I do not accept the argument that this is a well known tried and tested economic device or "economics 101" as poster #2 put it. As far as I am concerned it's a tax, a tool to grab money; nothing else! It also happens to be a extremely sick, crazy and grossly unfair tax. Those savings are safety nets, built up out of prudence and good behaviour, on money that was hard earned and already taxed to the dam fcuking hilt.

pk82

Fungus wrote: »

Pre-1 January 2014, there is no PRSI liability on deposit interest. Nobody 'should have' paid it.

I think self employed had to pay PRSI on interest in addition to DIRT

JTMan

pk82 wrote: »

I think self employed had to pay PRSI on interest in addition to DIRT

Ooops, forgot about the self-employed.

If you pay a modified PRSI rate, the liability to pay PRSI on unearned income began on 1 January 2013. Source.

For everyone else, it begins on 1 January 2014.

boomtobust

As well as raising DIRT to 41%, government wants to also add PRSI of 4% to interest earned by many bank customers on deposits. It is a further attack on anybody who tries to save in these difficult times, especially when this so called PRSI won’t contribute to any individual future benefits for those who will be forced to pay it.

The blatant attempt to make this tax hike sound less odious by calling some of it “PRSI” is as grating as the actual tax increase. Presumably government advisers decided against hitting the public with another levy after already giving us the pension levy, the health levy, the income levy etc.

Along with this we now have the ridiculous situation where those liable will have to personally file a return via the tax system. How many PAYE taxpayers have any idea how to self assess? Why aren’t the banks collecting the PRSI for the government as they do with DIRT?

You really do wonder about the competence of this government and its highly paid advisers

The J Stands for Jay

All this talk of DIRT being raised to encourage spending. They make it sound as if they'll reduce it at some point if they wanted to curb spending.

I would be amazed if DIRT and exit tax were ever reduced. There's no economic policy going on there, just an easy sourceof funds to avoid having to take on the grey vote or reduce their own salaries or double pensions.

Das Reich

So basically it worth nothing on having money on deposit account at 3%, if at the end almost half of this interest would be stolen by the state. 10,000 at 3% would be 300 less 135 for the government so only 165 € or 1,65% at the end, maybe the same as the inflation. I was thinking on buy some shares until I read the dividens are also taxed at 45%. Better to invest monery in another country.

boomtobust

It is institutionalised robbery, and also one of the reasons why older more affluent people are funnelling money into investment property. I emailed 3 local TD's about the new government position on all this. Labour and Independent guys didn't even respond. Contempt for those of us trying to put even a little bit by.

JTMan

Good to see more backlast against the huge deposit interest tax hikes that have occurred. There is not enough vocal people on this subject.

That being said, some return is better than no return, even with 41% to 45% tax.