Reducing the taxes on investment income is a central plank of Simon Harris’s plans to encourage the public to invest their savings in the stock market.

An internal government note outlining the finance minister’s new savings and investment account scheme says he plans to provide “beneficial tax treatment for certain investments”.

Harris is now “exploring ways to use the taxation system to better support people who are setting aside modest amounts of their earnings each month”, according to the memo. The Department of Finance analysis said huge amounts of savings were effectively “lying idle or being eroded by inflation”, meaning savers were “losing out by keeping their money lying on deposit”.

A government source said that under the new savings account, which could hold shares and investments, special rules would apply in which taxes would be waived until a cap kicked in.

According to the memo, this new account will be designed to support households in getting greater returns on their savings. It is due to form a key element of the coming budget, and will be rolled out from 2027.

Officials in the Department of Finance are examining the Investeringssparkonto (ISK) in Sweden, which has one of the highest rates of stock market investors in the world.

In Sweden, the first €28,000 a person invests in an ISK is tax free, with a low tax on the remainder which includes profits made on investments.

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“Irish people have huge amounts of savings, but right now they are earning them nothing. What we are looking at is a new scheme where tax would not be levied up until a certain cap. There would be a maximum cap set out, because this is not something designed for the wealthy,” a government source said.

“This is about about designing a new product aimed at ordinary savers, the nurse, the garda, the teacher, who put a small amount of money away each week or month for longer-term goals and are getting nothing in return.”

Irish investors are currently taxed at 33 per cent on any gain on shares and 38 per cent on many funds.

Analysis presented to the tanaiste last week showed that while Ireland is significantly ahead of the EU average in terms of saving, it is lagging way behind when it comes to retail investment, which refers to non-professional, individual investors who invest simply to further their own personal goals.

The government is planning a two-pronged approach over the course of 2026 and 2027, where the savers and investment account will be delivered as part of the forthcoming budget. Next year, a “child-centred” savings scheme will also be rolled out.

The government intends to publish a new savings roadmap by the end of March, a few months before Ireland takes up the EU presidency. An investment forum will also be set up made up of members of the public and private sector.

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“This is about empowering citizens to become more financially resilient in terms of their own futures,” a source said.

A government source this weekend said the new savings scheme would not bear any similarities with the SSIA accounts, which ran until 2002, when deposits received a 25 per cent state top-up.

Finance officials have also been examining saving and investments schemes in the UK and Canada. In the UK, the equivalent of the Swedish ISK is the individual savings account (Isa). The amount of money that can be saved annually tax-free in cash Isas is £20,000, although there are plans to cut this to £12,000 a year for under 65s. Under this scheme, any returns are not liable for tax.

In Canada, a tax-free savings account is offered to savers. This is a registered savings account that functions like an investment account. In that country, some income earned through interest or capital gains is treated as tax free.