The Government is to impose a 0.6% levy on private pension funds as part of the measures to pay for its jobs initiative.

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Minister for Finance Michael Noonan outlined details of the Government's jobs initiative in the Dáil.

The levy, which is intended to raise €470m a year, will operate for four years and will be payable in two annual tranches.

Over the four-year period it will raise €1.88bn. The full-year amount will be raised in 2011.

It will not apply to non-residents or to funds already in wind-up before today.

The rationale for levying the pension funds is that the bulk of pension fund assets are held offshore and this mechanism will bring some funds back into Ireland to fund job creation.

Mr Noonan said he was aware of the concerns of those in the pensions sector but he said the levy was not permanent and said they have in the past been the subject of massive tax reliefs.

The levy represents a significant contribution from the pensions sector and savers, he said.

The Government is also reducing the VAT rate from 13.5% to 9% on a range of tourism-related goods and services.

The reduction will be effective from 1 July 2011 until the end of 2013.

It will cost €120m in 2011, €350m in 2012 and 2013, and €60m in 2014.

Mr Noonan said the tourism sector can make a substantial contribution to Ireland's economic recovery.

Activities to which the VAT reduction will apply include restaurant and catering services, hotel and holiday accommodation, and entertainment services like cinemas and sporting facilities.

It will also apply to hairdressing and printed matter including newspapers and magazines, but not books.

The air travel tax is to be reduced to zero - provided airlines open new routes and boost passenger numbers. However it is not being taken off the statute book and can be reinstated if airlines do not do so.

The halving of employers’ PRSI for low-paid workers below €356 a week will affect 600,000 workers.

Both the VAT reduction and travel tax measure will be reviewed at the end of 2012.

Mr Noonan also announced the setting up of an internship programme.

He said those who take part will be paid €50 per week on top of their social-welfare entitlements.

He said there would be 20,000 places made available for those who want to get back to education or who want to avail of training.

He said it signalled a substantial and meaningful commitment and would cost €11m this year.

The Department of Finance is also liberalising the tax treatment for Research and Development activities and reducing employers' PRSI on share options awarded to employees.

Employees will still be liable to PRSI on share options.

Mr Noonan described the measures as the first step to improve our economic competitiveness and said it was about encouraging employment.

He said an independent fiscal advisory council would be established by the end of the summer and would represent a new approach to the management of the public finances.