# Indo: The treatment of savers is egregious and wrong



## Lightning (30 Mar 2014)

Charlie Weston hits the nail on the head ...

*We need new system where smart savers are rewarded*

http://www.independent.ie/opinion/c...where-smart-savers-are-rewarded-30137739.html



> IT is a strange state of affairs when the prudent get punished. But that is what is happening in this country, where savers are being thanked for their good sense with savage tax rates on interest earned and ever-reducing returns.





> That is prohibitively high and can be seen as punishment for those who want to provide for themselves rather than depending on the State.
> 
> Many of those with savings are older people who won't be encouraged to spend, as the Government would like, just because the tax rates are punitive.





> Contrast all this with the attitude to savers in Britain.
> 
> Following its recent budget, the British government has decided that pensioners with savings are to benefit from the issuing of a new pensioner bond by national savings, which will see them earn an estimated 4 per cent for three years.


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## Bronte (31 Mar 2014)

I imagine as a vote getting exercise a similar scheme will be announced in the next budget. Time to bribe us. And copy the Brits where the last budget has been welcomed by the middle classes. Key target for FG/Labour as they are the people who vote.  To say nothing of the grey vote.


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## Lightning (31 Mar 2014)

Copy the Brits and let us put 15,000 into a tax free savings account? Can't see that happening.

The government have hopefully reached the end of the line of constant deposit interest tax increases. I think the best we can hope for, in the next budget, with regard to deposit interest tax rates, is inaction.


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## Brendan Burgess (1 Apr 2014)

Why should deposit interest be treated any differently from other income e.g. dividend income? 

So have a withholding tax of 20% - but subject the full income to tax, prsi and USC as appropriate. 

Or maybe have a withholding tax of 41% and allow people claim a refund. ( Could do the same with shares, although I suspect that shareholders tend to declare their income more often than depositors)


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## Joe_90 (1 Apr 2014)

I don't recall the outcry when DIRT was 20% and marginal tax rates were 50%.

I presume that the preferential tax rate was to encourage people to put money into the banks. Now the govt don't want people saving so are "encouraging" them to spend or save elsewhere govt savings seem a natural alternative.

But Brendan's point is spot on why not treat it like dividends and refund the DIRT where the taxpayer has no liability.


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## Brendan Burgess (1 Apr 2014)

Hi Joe

I _think _that DIRT was brought it because most people don't make tax returns, so they weren't bothering to pay any tax.  At 20% , getting a refund didn't really matter that much. But at 41% , it matters.


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## monagt (1 Apr 2014)

> Why should deposit interest be treated any differently from other income e.g. dividend income?



Simple answer to this one == Dividend income usually comes from an appreciating asset.

Tax dividend income after allowing for Inflation not the current way................

1000 @ 2% for 1 year yields €20 Gross........Minus Tax, USC, PRSI = €11 approx
so now 1011

But Inflation + Cost of Living increases = 1.5% so left with 985 +11 = 996 = Loss of .04%

(*I know I have used 1.5 % - trying to add in Health, Property Tax, Water Charges, increased Car Tax,...........etc)


Tax on profits not on losses.......................also DIRT is better that having DIRT + returning the extra tax at end of year as before.

Maybe if the people had their original sum + inflation + some profit - they might buy something with the profit...........instead they don't get the chance as the Gov takes the money of them to pay our European Bills.


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## Bronte (1 Apr 2014)

CiaranT said:


> Copy the Brits and let us put 15,000 into a tax free savings account? Can't see that happening.
> 
> .


 
Sure wasn't there a great savings scheme there a couple of years ago.  SSA or something.  

Maybe I've been around too long, the no interest on deposits plus high Dirt tax, is not getting people to spend, it's actually making people save more as they are panicking with not making any money.  Any how do you get people who gorged on credit and are now atoning to spend.


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## Lightning (2 Apr 2014)

Brendan Burgess said:


> Why should deposit interest be treated any differently from other income



Why does any government have different tax rates on different types of income? For example, why does the UK government have a zero rate on interest on the first 15,000 GBP of deposits? 

To encourage a particular type of behaviour. 

Encouraging savings encourages people to plan for their future, to plan for rainy days and to plan for their retirement in conjunction with a pension. It leaves individuals less state dependent when things go wrong and encourages sound financial planning. 

This logic does not apply to many other income types. Savings are different and deserve different tax treatment.


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