The Minister for Finance Mr McCreevy is planning a new tax scheme whereby savers who deposit between £10 and £250 a month in special accounts will receive special taxation status.
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Mr Charlie McCreevy
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The scheme, expected to be detailed next Thursday, will mean personal savers will be subject to tax-free interest rates and will be exempted from paying deposit interest retention tax (DIRT). They will also be in line for a special bonus.
Mr Charlie McCreevy's scheme is designed to lower inflation levels by removing millions of pounds from circulation by encouraging saving and controlling consumer spending. The waiver on DIRT tax and the monthly bonus is expected to cost the Exchequer millions, however.
The new system, expected to be included in next Thursday's Finance Bill, will get underway in May.
New accounts will be set up for savers, who must leave the funds in the accounts for five years, or pay the penalty of full DIRT tax. The Government bonus, rumoured to be in the region of £1 for every £4 saved, will be paid into the accounts monthly.
The announcement comes on the eve of a crucial meeting of the EU Council of Fiance Ministers in Brussels tomorrow, where ministers are expected to ratify the Commission's edict that Ireland be formally reprimanded over what are seen to be Mr McCreevy's inflationary Budget proposals.
Mr McCreevy and the Taoiseach, Mr Ahern, have already said that there will be no changes in Budget 2001 in spite of a possible EU reprimand.