Irish Banks and Smokers Only Budget Losers as Election Beckons

  • Irish finance minister to extend banking levy by five years
  • Noonan wants to provide certainty before bank stakes are sold

The Irish government will deliver a little payback for everyone in the 2016 budget. Except banks and smokers.

In the last budget before national elections, due within six months, Irish Finance Minister Michael Noonan laid out plans for 1.5 billion euros ($1.7 billion) of tax cuts and spending increases next year. He also increased a levy on cigarettes, the only tax rise in the budget, and extended a 150 million-euro annual banking charge by five years to 2021.

“I’m not scapegoating the banks, but they still owe the Irish taxpayer,” Noonan told reporters in Dublin late Tuesday.

Ireland spent 64 billion euros saving banks during the nation’s financial crisis, which helped plunge the economy into its worst recession on record. Noonan, who is preparing to sell the state’s remaining banks stakes, said that setting out plans for the future of the levy would provide certainty for investors.

“The extension of the bank levy for five years is bad news for the sector in and of itself,” said John Cronin, an analyst at Investec Plc in Dublin. “But it’s something that we had been expecting for some time.”

Noonan said while he may rejig how the government calculates the levy, which is based on Irish deposits, he won’t seek to raise more than 150 million euros a year from the charge.

Allied Irish Banks Plc, 99 percent owned by the government, rose 6.9 percent as of 10:15 a.m. in Dublin after dropping the same amount yesterday. Permanent TSB Group Holdings Plc, 75 percent controlled by taxpayers, was little changed after rising as much as 1.9 percent.

Bank of Ireland Plc, 14 percent owned by the state, rose 0.6 percent on Wednesday after dropping 1.6 percent yesterday.

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