Personal Income Tax (IRS) adds up 500 million to banking deposits in May
Investments in deposits made a recovery in May after the plunge in the previous month. Personal Income Tax (IRS) helped, but other factors played a part in this increase.
After April tumble, investments in deposits rocketed. The total amount the Portuguese deposited increased in a little over 500 million euros in May, during a month in which tax reimbursements were liquidated by the Government.
According to data disclosed by the European Central Bank (ECB), the Portuguese held a total of 141.6 billion euros in deposits, translating a 512 million euros increase in comparison to the previous month. In April, deposits had lost around 800 million euros because of families’ larger promptness to consumption because of Easter vacations.
“The key explanation for this increase is IRS, which were faster because of automatic returns”, stated Filipe Garcia, IMF Economist, to ECO. He also highlighted there was another determining factor for this increase: “No recent savings products were launched or promoted. Sovereign bonds sold to retail investors (OTRV) subscriptions has been having an impact in deposits”.
This rise happened mainly on demand deposits, whose total amount increased 671 million euros in May, to a total of 44.95 billion euros — after having plunged 756 million euros in the previous month. It should be highlighted that one year ago (July 2016), investment in deposits reached a record of 145 billion euros, although it has been decreasing mainly because of the low interest rates offered by banks.
