Jack Chambers aims to use the proceeds for tax cuts. Photo: Sam Boal
Finance Minister Jack Chambers has said he is planning to continue with the bank levy, which will be included in Budget 2025 when it is unveiled on October 1.
In a statement from the Department of Finance, the minister said the return generated by the levy would provide him with additional scope to ensure there is a “substantial income tax package and options on further reducing the tax burden for families and workers”.
The announcement, over a month before the Budget, came as a surprise as there was no expectation that the bank levy was about to be scrapped. It delivers about €200m a year to the Exchequer.
The levy must be paid by banks that received State assistance during the global financial crisis – including AIB, Bank of Ireland, PTSB and EBS.
Michael McGrath, Mr Chambers’ predecessor as finance minister, announced the introduction of a revised bank levy in Budget 2024. It replaced one in existence since 2014, which was based on a percentage of the Deposit Interest Retention Tax (Dirt) paid by the banks in a given year.
The revised levy is in the form of a stamp duty at a rate of 0.112pc of the total amount of money held on deposit by the banks at the end of December 2022.
In the statement Mr Chambers said: “Banks in our country today are highly profitable and are benefiting from the stable and positive economic position we are in now. I think it is entirely appropriate that banks continue to make a contribution back to the State in this context.
“The return generated by the levy will provide me with additional scope on ensuring there is a substantial income tax package and options on further reducing the tax burden for families and workers as part of Budget 2025. I am acutely aware that many people are still struggling with the cost of living and providing additional support is a key focus for me and for Government in the upcoming Budget.”
Mr Chambers said he had examined the bank levy with officials in the Department of Finance and would be making a recommendation to Government to extend it.
“There will be further consideration on the exact make-up and composition of the extension of the levy and this will be a decision for Cabinet as part of Budget 2025, but I will be very clear in my recommendation to Government colleagues to extend it again,” he said.