McCreevy unveils five-year tax-friendly saving scheme

A new savings scheme aimed at slowing public spending and quelling inflation has been unveiled by the Minister for Finance Mr McCreevy.

Details of the scheme were announced as part of the Finance Bill today, which gives effect to the December Budget. The scheme will be open for one year beginning on May 1st and savers will be asked to commit their money for five years.

Its major selling point is a 25 per cent top-up by the Government on interest earned, offsetting applicable taxes.

But the scheme could prove expensive for the Government with liability estimates running up to £1 billion over the five years.

Mr McCreevy also announced a new tax regime for share options which will mean, under approved schemes, employees will not have to pay income tax when exercising their share options.

Irish technology companies in particular have called on the Government to encourage share option schemes as a way of retaining high-quality staff.

Under the Finance Bill Mr McCreevy also considered the simplification and enhancement of tax relief provisions for donations to charities.

The Bill also confirms the Government's controversial £1.2 billion personal tax cuts announced in Mr McCreevy's December budget. The cuts will take 133,000 taxpayers out of the tax net and reduce rates for almost 1.2 million people.

The Tánaiste, Mary Harney, also welcomed the scheme and said it would encourge people to save money by retuning tax money to them while giving equal benefit to those on modest and fixed incomes.

"All savers are winners equally in the new savings scheme introduced by the Minister for Finance today," said Ms Harney.

This is a very powerful and innovative savings initiative."