The Federation is finalising its pre-budget submission and supports any tax innovations that will incentivise savings.

It has two main proposals on savings:

The exit tax on life assurance/ savings products should be cut from 25 per cent to 12.5 per cent.

The gap in providing costs for long-term care for the elderly could be bridged through insurance products. The industry could develop products linked to health insurance or pensions if the tax incentives were in place.

Small Firms Association

The Association wants to examine ways to encourage savings and help first-time house buyers. Its pre-budget submission is expected shortly, featuring two main points:

Proposal for a tax-free savings allowance of up to £5,000 per person per year for a minimum of three years if the money is used solely for the purchase of property. Such a scheme would be administered by the National Treasury Management Agency.

Suggestion urging the extension of save-as-you-earn schemes to non-quoted companies.

Tanaiste, Ms Harney

The Tanaiste wants to stimulate an increase in savings, not simply a transfer of money already being saved to a new tax-efficient scheme. She is proposing some form of voluntary contractual savings scheme rather than a bond.

The first proposal would be to remove the tax on capital and interest for locked-in savings, while increasing the rate of return. She envisages a minimum period of, say, three years of saving from income but is open to various methods of application.

The National Treasury Management Agency could float a voluntary scheme where people could choose from a range of savings products, for example one tied to the rate of economic growth. The idea is to offer people a chance to participate in the growth of the economy.

The Irish Association of Investment Managers

The Association is proposing a new tax-based investment scheme designed to increase savings and reduce inflationary pressures, aimed primarily at people in the public sector and companies that do not have access to share option, save-as-you-earn or profit-sharing schemes. Under the Association's proposal, savers would be able to invest up to £500 per month in unit funds for a minimum five-year period. They would also be able to invest performance pay, within an overall limit of £6,000 per annum .

Tax relief at the marginal rate would apply.