Michael Noonan (Limerick City, Fine Gael)
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In this amendment, the Deputy is seeking to reduce the rate of deposit interest retention tax to a rate equivalent to the taxpayer's marginal rate of tax, that is, 40% or 20%, or zero if the person does not have a taxable income. The standard DIRT rate has increased significantly since 2008, from 20% to 41%, and is now one percentage point above the higher rate of tax. Up to budget 2009, the rate of DIRT was equal to the standard rate of income tax at 20%. The increases in recent years were introduced to generate additional yield and encourage spending in the economy to stimulate growth and employment.

I am informed by Revenue that the estimated cost of charging DIRT at rate equivalent to individuals' marginal income tax rate, that is, either 40%, 20% or 0%, depending on the highest rate of tax applicable to their income, would be of the order of €77 million for 2016, based on a forecasted DIRT yield of €298 million. This is a necessarily tentative estimate as it cannot, for instance, account for any individuals moving bands. That said, it represents a substantial loss to the Exchequer, particularly given that under the terms of the Stability and Growth Pact, Ireland may not introduce discretionary revenue reductions unless they are matched by other revenue increases or expenditure reductions. This means the Government must consider carefully any tax changes, as any reductions will have to be offset elsewhere. I am further advised there would also be significant administrative issues and costs associated with such measures, both for Revenue and for financial institutions. In the circumstances, I am not disposed to accept the amendment.