Ireland hikes bank levy to 200 million euros, revises methodology

Reuters

Published Oct 10, 2023 19:48

DUBLIN (Reuters) - Ireland will revise how it calculates its levy on banks after announcing plans to raise 200 million euros ($211.7 million) from the measure next year, up from 87 million euros in 2023, Finance Minister Michael McGrath said on Tuesday.

The levy previously raised a flat 150 million euros a year after its introduction following the banking crisis a decade ago, but that fell last year after two of the country's then five retail banks announced they were leaving the market.

The share paid by the remaining three banks is based on the amount of deposit interest retention tax (DIRT) each pay. McGrath told a news conference that the basis of the levy will change to being related to the value of a lender's deposits.

Further details will be included in legislation next week that will underpin Tuesday's budget announcement.

Analysts at Davy Stockbrokers had said that an increase to 200 million euros based on the existing DIRT would have had an outsized impact on Permanent TSB, relative to its larger rivals AIB and Bank of Ireland.

McGrath added that he considered widening the levy to include non-bank lenders, but decided against doing so because in the main such lenders do not hold deposits, meaning it would "in effect be tantamount to a levy on mortgages".

"It is important that the banking sector continues to make a contribution to the Irish economy following the support they received during the financial crisis," McGrath earlier told parliament in his budget speech.

"I will review the levy again next year to ensure it remains appropriately calibrated."