I propose to take Questions Nos. 95 and 109 together.
The study referred to was carried out by the Revenue Commissioners in 2002. Like an earlier 1997 study, I have placed a copy of this in the Oireachtas Library. Of the top 400 earners' cases examined in the 2002 study, 117 had an effective tax rate of less than 30%; 231 had an effective rate between 30% and 44% and 52 had an effective rate of 45% and higher. It is the case that, of the 117 earners that had an effective rate of less than 30%, 51 had an effective rate of less than 5% and 29 of those 51 top earners had an effective rate of 0%.
However, this study indicates an increase in the effective tax rate of high earners in 1999-2000 compared with the findings of a similar study carried out by the Revenue Commissioners in 1997 on the effective tax rates of high earners in the tax years 1993-94 and 1994-95. One of the conclusions drawn from the 1997 study was that the use of capital allowances on buildings was one of the main methods of reducing the tax bills of high earners to very low levels. I subsequently capped the amount of capital allowances on buildings that could be set-off against non-rental income. Arising from this latest study I announced in budget 2003 the abolition of capital allowances for investment in registered holiday cottages and the reduction in capital allowances for hotels to the rate applying generally to industrial buildings. I also indicated that a range of reliefs would not be extended beyond their end-2004 termination date.
While I support properly designed tax reliefs, the unintended use of the tax system by exploiting loopholes to reduce the tax paid by high earners is not my aim. Since taking up office as Minister for Finance, I have acted swiftly to address tax avoidance schemes that serve to narrow the tax base. Indeed, the 2003 Finance Act contains a series of such anti-avoidance measures.