DIRT hike hopes to turn savers into spenders

THE Government has made an attempt to encourage consumers to spend their cash by increasing a tax on savings.

DIRT tax on deposit accounts will be increased by 2% to 27% and by 2% to 30% in the case of longer-term deposit accounts.

Financial service providers such as banks, building societies and post offices offer accounts where you can save a sum of money for which they will pay you an annual rate of interest in return, usually as a percentage of the deposit. The interest you receive is subject to a tax called Deposit Interest Retention Tax (DIRT). The tax is deducted by the bank before the interest is paid to the customer.