Personal investment accounts are 'not a get-rich-quick scheme', says Simon Harris

'This is not an SSIA scheme. It's not a get-rich-quick scheme,' Tánaiste Simon Harris said. 'This is a scheme to build up financial resilience.' Picture: Clodagh Kilcoyne/PA

Tánaiste and finance minister Simon Harris has said a new personal investment scheme is not a “get-rich-quick” scheme.

However, he also suggested the accounts may be expanded in the years to come, including the idea of a person being allowed to have multiple accounts in the names of their children or grandchildren.

It comes as both Mr Harris and public expenditure minister Jack Chambers defended the increases to tax rates and social protection rates, with Mr Chambers saying that while the changes were “marginally above inflation”, nobody has attempted to claim that they were way ahead of it.

As part of his budget package, Mr Harris announced a new “Ireland State Savings” account. This will allow people to save up to a tax-free threshold of €50,000, with any money above this charged at 1% tax. It will have a maximum contribution limit of €12,000 per annum and no minimum contribution.

At his budget day press conference with Mr Chambers, the Tánaiste defended the annual limit on the account.

“This is not an SSIA scheme. It's not a get-rich-quick scheme,” he said. “This is a scheme to build up financial resilience.”

He also said that while this is phase one of the scheme, phase two could include accounts for children, confirming that people will be able to have more than one account type.

When asked if people could invest multiples of €12,000 a year for multiple children, Mr Harris confirmed they could.

As part of the €1.3bn income tax package, the Government raised the entry rate for the 40% rate of tax from €44,000 to €46,500.

The Personal, Employee and Earned Income Tax Credits will each rise by €125. The Home Carer Tax Credit will increase by €100.

The changes mean that someone earning €50,000 a year will pay €691 less in tax per year. A couple earning €100,000 between them will see savings of around €1,500

The USC entry threshold will increase by €1,600, rising from €28,700 to €30,300.

Those earning €25,000 or less will be the biggest winners following the tax package, with savings of €1,240 per year.

When asked why he did not index the tax bands to match inflation, the Tánaiste said adjustments to bands and credits will be how the Government makes changes to the tax system over the rest of this Government’s term in office.

“Governments should reserve the right to have that flexibility because obviously indexation can go in both directions,” he said.

“It's important that we actually have a situation where governments can decide what the best package of measures is.” 

Mr Chambers said the decision on social welfare rates was “marginally above inflation”.

“Is it massively above inflation? It's not. I don't think any of us said that,” he added.

Elsewhere, Mr Chambers once again rejected the Irish Fiscal Advisory Council’s suggestion that there should be multiannual budgets.

He argued that he would be “wary of it embedding inefficiencies”.

He added: “If we have an element of a system that is not delivering, why would we have a three-year budget to say, ‘Carry on?’”

• Louise Burne is Political Correspondent.