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Fianna Fáil Makes Irish Election Tax Pledges

by Jason Gorringe,, London

29 December 2015

Irish opposition party Fianna Fáil has said that its 2016 election manifesto will include proposals to cut the Deposit Interest Retention Tax (DIRT) and increase the capital gains tax (CGT) threshold for small investors.

The party's finance spokesperson, Michael McGrath, said that a Fianna Fáil government would reduce the rate of DIRT from 41 percent to 33 percent over the lifetime of the next parliament. This would cost EUR58m (USD63.7m) a year when fully implemented. The party would also exempt the first EUR100 of interest from DIRT.

McGrath also announced that a Fianna Fáil administration would seek to encourage small investors by doubling the tax-free threshold for capital gains. Currently a CGT rate of 33 percent is payable on gains over EUR1,270. "This low threshold means that individuals making a relatively modest return on their investments are brought into the tax net. We believe it is vital to encourage people to make investments in areas other than property. By doubling the annual personal exemption threshold to EUR2,540, we will encourage a wider range of investments to be undertaken," McGrath said.

He added: "Savers have got a very raw deal under this government. [Finance] Minister Michael Noonan has increased the tax on the interest earned by savers by a massive 14 percent (from 27 percent to 41 percent). In addition, anyone with unearned income (deposit interest, rent, dividends etc.) of greater than EUR5,000 has to pay an extra four percent Pay Related Social Insurance on deposit interest, bringing the total tax on interest earned to 45 percent. This is a punitive tax on people who have prudently saved money, which itself has already of course been taxed in full."

Responding to McGrath's announcements, Noonan warned that the country "cannot go back to the same old Fianna Fáil who wrecked the economy, have learned nothing from the past, and are still the high-tax, high-spend party." He pointed out that changes to Universal Social Charge (USC) rates due to enter into force on January 1 will reduce the marginal rate of income tax to below 50 percent for the first time since 2009.

"Fianna Fáil opposed these reductions because they do not grasp the concept that putting extra money in people's pockets has a positive effect on our economic recovery. The low- and middle-income earners who will benefit from the USC reductions would pay more tax under Fianna Fáil," Noonan said.

TAGS: individuals | capital gains tax (CGT) | tax | investment | Ireland | interest | tax thresholds | ministry of finance | tax rates | social security | dividends | tax reform | individual income tax

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