CUDA argues that this change would encourage a culture of saving, particularly among low- and middle-income households, and align with government goals of promoting financial responsibility and reducing reliance on debt.
Speaking ahead of the election, Kevin Johnson, CEO of CUDA, said:
"Removing DIRT on modest savings balances is a simple yet effective policy to incentivise saving and help people build financial resilience. For many low- and middle-income households, this could mean the difference between relying on high-cost credit during emergencies or having a financial safety net in place."
Encouraging a Savings Culture
Credit unions, which play a vital role in fostering financial responsibility, offer competitive savings rates that already benefit communities across Ireland. And while there has been much talk about the savings offerings from some overseas providers, many Irish credit unions offer strong rates on deposit savings. Dividend payments are also on the increase with many credit unions expected to declare higher rates at their AGMs in December and January.
Removing DIRT on savings below €10,000 would amplify these benefits, particularly for low- and middle-income earners.
CUDA estimates the cost to the Exchequer to abolish DIRT on modest savings would be approximately €18 million annually, based on current deposit levels. However, this cost would be outweighed by the societal benefits of a stronger savings culture, reduced reliance on state supports during financial crises, and the promotion of long-term financial stability for households.
A National Need for Financial Resilience
As interest rates have risen, Irish savers are finally beginning to see better returns on their deposits. However, the 33% DIRT tax disproportionately impacts those with smaller savings, making it harder for them to accumulate wealth or build financial security.
"Low- and middle-income savers are penalised for their prudence under the current system and we are very cognisant of the high number of people who do not have an emergency or ‘rainy day’ fund," said Johnson.
"By abolishing DIRT on savings below €10,000, the government can help these households build financial stability while encouraging others to begin saving. It’s a practical solution that supports the national goal of fostering financial responsibility and reducing reliance on debt."
A Broader Economic Impact
CUDA’s proposal aligns with ongoing efforts to boost financial literacy and savings habits nationwide. Recent government data highlights a rise in savers benefiting from energy efficiency grants and other schemes, underscoring the public’s willingness to save when incentivised.
Additionally, as credit unions continue to provide competitive deposit offerings, abolishing DIRT would help them play an even greater role in supporting their members’ financial wellbeing. This initiative would not only assist individual households but also contribute to Ireland’s broader economic resilience.
A Call to Action for Political Parties
CUDA is urging all political parties to prioritise the abolition of DIRT on savings below €10,000 as part of their election manifestos and commit to its implementation in the next Dáil.
Kevin Johnson concluded:
"The benefits of this proposal are clear. It would encourage prudent financial behaviour, reduce reliance on debt, and promote economic resilience, particularly for those on low and middle incomes. As we approach the general election, we hope all political parties will recognise the value of this initiative and support its inclusion in their plans for government."
