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Dáil
‹ Ceisteanna—Questions. Oral Answers. - Interest Tax Allowance.

Tax-free interest allowance on savings

Summary

The exemption for qualifying savings interest was introduced at £25 in 1956 and raised to £70 in 1967. Kelly argued that inflation made an increase overdue and questioned whether raising the allowance would better encourage savings; Colley said the tax code and savings incentives were kept under review, but an increase was not appropriate at present, while noting that small-savings levels were generally satisfactory.

asked the Minister for Finance (a) the amount of the tax-free allowance on interest on savings; (b) the year in which this figure was first fixed.

Comment on this

Presumably the question refers to the exemption of interest on deposits with the Post Office Savings Bank, the trustee savings banks and certain commercial banks which is provided for under section 344 of the Income Tax Act, 1967, as amended. The first £70 of such interest, or, in effect, £140 in the case of a married couple, is exempt. This limit was fixed by section 8 of the Finance Act, 1967.

Comment on this

Was there corresponding legislation—whether repealed or consolidated, I do not know—at an earlier date than 1967 which also included the figure of £70?

Comment on this

There was.

Comment on this

When did the figure of £70 first crop up in this context?

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The exemption was introduced in 1956; it was then £25.

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So it has been £70 since 1956?

Comment on this

Seventy pounds since 1967. It was £25 when introduced in 1956.

Comment on this

For the last 12 years it has been £70. Has the Minister any idea of the relative value of £70 in 1967 money today?

Comment on this
Joseph Brennan An Ceann Comhairle Fianna Fáil

There is nothing in the question about the relative value of money, Deputy.

Comment on this

I have one more question when the Minister has answered that.

Comment on this
Joseph Brennan An Ceann Comhairle Fianna Fáil

If the Deputy will adhere to the subject matter of the question I will permit him.

Comment on this

The question asked the Minister on what date—I did not mention the figure of £70 but the Minister has revealed it—the figure of £70 was fixed? He has told the House in 1967. I am putting to him in the best way I know the very obvious reflection that it is time it was increased by reason of the fall in the value of the pound note.

Comment on this
Joseph Brennan An Ceann Comhairle Fianna Fáil

That is not a question; it is a statement. This is not the time for making speeches.

Comment on this

Sir, I am asking an ordinary question but you keep sniping at me from the wings. How can I put this question to the Minister unless I do so in the way in which I am endeavouring?

Comment on this

Will I put the question for the Deputy? Would the Minister not agree that an increase in the allowance is long overdue? Is that not what the Deputy is asking?

Comment on this

The answer is that the overall operations of the tax code and the effectiveness of measures to encourage savings are kept under constant review. I do not think that an increase in the allowance would be appropriate at present but the matter will be kept under consideration.

Comment on this

But does not the State engage expensive advertising agencies to promote savings campaigns on its behalf? Would not the money so spent be more effectively spent in progressively increasing this allowance because the State does conduct savings campaigns?

Comment on this

The level of small savings, which is presumably what the Deputy has in mind, has been quite satisfactory on the whole.

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But it could be better. Would I be right in thinking that the figure in England is also £70?

Comment on this

I am not sure about that—I think the Deputy is right—but I am not absolutely sure.

Comment on this

Usual paddywhack, but we can be perfectly sure that if England increases the figure then some urgent consideration will be given it here.

Comment on this

I would not be too sure of that, Deputy.

Comment on this