FF/Green government planned SSIA successor to ‘access billions at time of urgent need’

The Fianna Fáil/Green government considered introducing a successor to the special saving incentive account (SSIA) scheme at the height of the financial crisis, with “the key variation being that the State be the recipient of the savings”.

Freedom of Information (FoI) documents show the troubled administration researched a plan in January 2009 under which individuals would surrender up to €100,000 of their earnings to the State over five years.

"In effect, people would be making a five-year loan to the exchequer . . . In this way, the State could access billions at a time of urgent need to invest in infrastructure and stimulate the economy without recourse to borrowing," a cabinet paper marked "confidential" states.

According to the document, the incentive to get involved was tax-based and participants would be “paid back” during the “subsequent economic cycle” in years six to 10 of the scheme.

State bonus

The original five-year SSIA was introduced in 2001 by then minister for finance Charlie McCreevy. Account holders were offered a State bonus of €1 for every €4 invested monthly, up to a maximum of €254 a month.

A "redesigned successor" to the SSIA scheme was proposed in cabinet papers drawn up in January 2009 as the government led by Brian Cowen grappled with the economic crisis as it prepared for that year's budget.

Under the proposed scheme, an individual would have signed up to forgoing a specified amount of their income for five years.

“Amounts of up to €20,000 per annum would be eligible to be forgone and surrendered to the State – no tax at source would be payable on such income amounts, which would ideally be collected by Revenue,” the document stated.

Purse of €10bn

It was estimated that €10 billion could be raised over five years if more than a quarter of the workforce bought into the scheme at an average of €4,000 per person per annum. “By using this additional €10 billion on capital investment in the economy over the next five years, the State could significantly stimulate activity and potentially increase tax revenue, in contrast to the usual recessionary cycle.”

The scheme would have offered contributors – over years six to 10 inclusive – a remittance in each year with a tax rebate of 20 per cent on their marginal rate of tax “by way of payback”.

Cabinet documents prepared for the 2009 budget are among the first batch of previously confidential State papers released to The Irish Times under revised FoI legislation, which allows for such documentation to be made available after five years.

The €15 fee for FoI requests has been abolished. However, to release the documents,€125.70 was requested by the Department of the Taoiseach. This fee was calculated for one staff member working six hours at €20.95 an hour.