The Government has offered new incentives to encourage some 500,000 low-earners to invest part of their SSIA savings in pensions, writes Arthur Beesley, Senior Business Correspondent.
It has also moved to give sweeping new powers to Revenue to collect confidential banking records from financial institutions.
Minister for Finance Brian Cowen used the Finance Bill, which gives effect to the Budget, to unveil a plan under which Government will give low-earners €1 for every €3 that they set aside from their SSIA savings for pensions.
The scheme is aimed at people who pay no tax or earn up to €50,000 and remain in the low tax band. They will be given three months from the time their SSIA account matures to invest a maximum of €7,500 in a pension in return for a maximum Government payment of €2,500.
The Government has set aside €250 million for a plan that is designed to match the simplicity and appeal of the SSIA scheme. It also increased tax incentives for higher earners nearing retirement to make pension contributions.
However, Fine Gael leader Enda Kenny said the measure did not go far enough to address the shortfall in pension provision.
"In particular, a chance has been missed in light of the ending of the SSIA scheme to do something much more innovative to encourage people to invest in pensions."
After years of investigations into the widespread use of financial products to facilitate tax evasion, Mr Cowen's move to give Revenue access to information held by the financial institutions is designed to make it harder for their customers to hide money from the Exchequer.
Banks, life assurance companies and mutual funds will be obliged to make an annual return to Revenue in which they must provide the names and addresses of customers and the interest and other profit payments they received.
The Minister said he was introducing the measure in light of recommendation from the Revenue Powers Group, which said in 2003 that the evasion of Deposit Income Retention Tax and other taxes strongly indicated that tax funds were hidden in the institutions.
He did not agree that client confidentiality would be compromised, and said similar measures were in place with other tax authorities in respect of money held in Ireland by non-residents.
He plans to consult with the bank industry before phasing in the mandatory filing of annual returns. The Bankers' Federation said it was happy to co-operate with the consultation.
After closing off several tax incentive schemes in the Budget, the Minister also introduced a new 10 per cent surcharge on tax avoidance transactions and closed off "abusive" loopholes on film leasing, VAT, capital gains tax and the transfer of commercial assets.
The owners of rental properties will not be entitled to mortgage interest relief if they do not register their property with the Residential Tenancies Board.