My matter relates to cruising to tax advantage. According to a report in a national newspaper this week, a consortium of wealthy Irish businessmen and professionals have purchased the luxury yacht, the Christina O, formerly the property of the legendary Aristotle Onassis, for $50 million. Domestic tax law allows them to claim capital allowances for the purchase of the yacht and for its refurbishment and to set these costs against their Irish income for tax avoidance purposes. It is a worthy and successful business enterprise for these investors, but it is absurd that such a venture attracts such significant tax breaks for those involved and that the tax code still has many devices such as this embedded in it.
President McAleese stated recently that alcohol abuse is the dark side of our social life, but tax avoidance by the wealthy is the dark side of the economy. I do not wish to comment on any individual. However, I wish to highlight the general principle of tax breaks that enable wealthy persons to achieve a virtual tax free status in the this State, as was shown in the Revenue review of a sample case group of high earners some months ago. A number of other examples related to capital allowances have come to light in recent times, notably the sale and lease back set up for property at the IFSC and the capital allowances concession granted astonishingly to the promoters of the Kinnegad motorway PPP project.
All of these devices, sponsored and fostered by Fianna Fail and the Progressive Democrats, allow wealthy individuals to essentially decide how much tax to pay. The Revenue survey of the wealthy showed that significant percentages of high earning individuals paid no tax or paid tax at low rates. In reply to a parliamentary question I tabled last December, the Minister for Finance, Deputy McCreevy stated that of the approximately 53,6000 taxpayers who acknowledged gross incomes over €100,000 in 2002, some 31,500 were self-employed, including proprietary directors. The Minister confessed that a relatively small number of persons, approximately 3% of taxpayers, declared such incomes. This is a ludicrous figure, totally unsupported by the data from the household budget survey.
The tax avoidance industry starves the health and education services and creates a deeply divided society that runs totally counter to the ideals of those who fought for our national independence. I call on the Minister of State to categorically set out the benefits accruing to the proprietors of the scheme of the yacht scheme I mentioned. Parents are currently deeply worried about the imposition of further swingeing fees for third level education and they deserve an answer. It is ironic that the wealthy can yet again benefit from the Minister for Finance's largesse. For all his bluster at budget time about closing tax loopholes, the Minister has been equally busy creating new ones while continuing to ignore notorious existing ones.
It is excessively difficult to obtain detailed information regarding the operation of such schemes and the beneficiaries. The information is often refused by the Minister and the Revenue Commissioners on the grounds that to do so would undermine the correct principle of confidentiality between the taxpayer and the Revenue Commissioners. However, these are large schemes and are a significant cost in terms of tax expenditure. They starve our health and education systems of so much in the way of resources that the Minister must come clean on tax avoidance. I hope the Minister of State will not hide behind such excuses. If we are to have a rational and reasoned debate about tax avoidance and tax breaks and the additional economic activity they generate, we need the full facts.
