Tipperary TD seeks windfall tax on banks who don't pass on interest rate rise to savings

Fianna Fáil TD for Tipperary Jackie Cahill has called on the Government to introduce a windfall tax on banks operating in Ireland who fail to pass on interest rates increases to their customers’ savings.

Deputy Cahill has sent a written request for action to his party colleagues, An Tánaiste Micheál Martin and the Minister for Finance, Michael McGrath.

Deputy Cahill’s intervention follows the Financial Times reporting that Irish banks rank last among the UK, US, Eurozone and 18 other European countries in passing on interest rates gains to savers in Irish banks.

“In recent months we have seen the profits of the three pillar banks soar as a result of rising interest rates. Both AIB and Bank of Ireland in recent weeks have announced profits for the first six months of the year of over €1Billion each, far in excess of their estimated profits.

“On top of this, none of the banks are slow at passing on the interest rate hikes to borrowers and mortgage holders the length and breadth of the country who are really feeling the pinch as a result of this.

“This is galling for a lot of people when the complete opposite approach is being adopted by the banks when it comes to passing on rate increases to their borrowers.

“The Financial Times have now reported that Irish banks are laggards in comparison with the banks in the UK, US, Eurozone and the rest of the EU when it comes to passing on rate hikes to savers. The pillar banks are wilfully making enormous profits off the backs of mortgage holders while utterly failing to pass on the increases to savers. This is wrong.”

Deputy Cahill stated that the idea of a windfall tax on bank profits is not a novel idea and has been applied elsewhere in recent times.

He said: “I am not suggesting that we reinvent the wheel here. The Government is rightly introducing a windfall tax on energy providers. Other EU members such as Spain, Hungary, the Czech Republic and Lithuania have already introduced such measures on excess bank profits.

“It appears that certain businesses and banks are profiteering off the cost of living increases, much of which is compounded by the War in Ukraine. This is plain wrong and needs to be tackled. I have written to both An Tánaiste, Micheál Martin and the Finance Minister, Michael McGrath in support of this in advance of Budget 2024.”