Minister for Finance Brian Cowen should take steps in the Budget to levy water charges on households, a business lobby said yesterday.

The Irish Small and Medium Enterprises (Isme) organisation said the Minister should redistribute the burden of commercial rates and water charges to other sectors, including the State sector and householders, to foster cost competitiveness in the economy.

Isme made the call in a pre-Budget submission that said the restoration of competitiveness and "rewarding enterprise" should be Mr Cowen's priorities when formulating the Budget.

The lobby called on the Minister to tackle public-sector pay and said in its submission that the principle of a "job for life" should be abolished. Future wage increases in the public sector should be funded from productivity gains, Isme said.

It also said PAYE allowances should be scrapped and replaced with a doubling of the personal tax credit.

"This is to offset the current discrimination that does not allow company directors or the self-employed to claim PAYE allowances."

The Irish Exporters' Association said in a separate submission that the taxation system should be refocused to meet the needs of big international service companies. Favourable global trade dynamics meant service exports could double to more than €100 billion in the next five years "with the right taxation environment", said chief executive Liam Shanahan.

The body called for the reintroduction of remittance-based taxation and for the reintroduction of relief from income tax for staff who work abroad on export sales. It also called for a tax exemption regime for key trading countries not currently covered by double taxation agreements.