Pat Breen
Question:193 Mr. P. Breen asked the Minister for Finance the extent to which his Department is conducting a review of tax breaks in the tax code; and if he will make a statement on the matter. [20881/03]
Written Answers. - Tax Code.
Michael D. Higgins
Question:196 Mr. M. Higgins asked the Minister for Finance if he intends to undertake a full audit of the cost of all tax reliefs, in view of the fact that in reply to a previous parliamentary question he was unable to supply the cost to the Exchequer of more than 25 such reliefs; and if he will make a statement on the matter. [20751/03]
I propose to take Questions Nos. 193 and 196 together.
I presume that Deputy Breen and Deputy Higgins are referring to tax expenditures and tax reliefs but not to those which are considered part of the structure of the tax system, such as the personal tax credits for income tax.
Tax expenditures and tax reliefs are spread throughout the tax system and are found under all tax headings including income tax and corporation tax, the capital taxes and the indirect taxes. These are incentives within the tax code which are designed to meet a specific need within the economy or society in general by encouraging and incentivising certain behaviours or reducing particular costs on the part of the tax paying public. They take a number of forms and have different and sometimes several objectives.
As I said in budget 2003, I am a supporter of properly-focused, clearly-defined, specific reliefs which can encourage the development of goods and services, including public services, which might otherwise not be provided, or where provided, are too little or too late. However, as I also said, reliefs narrow the tax base. A widened tax base is the price that must be paid to keep tax rates low and all tax reliefs must therefore be subject to ongoing review. Accordingly, in the budget, I indicated that a range of reliefs would not be extended beyond their end-2004 termination date.
There are difficulties in providing costs for some tax reliefs mainly due to the simplification of the tax returns process and the resulting aggregated nature of the information gathered. My Department is working closely with the Office of the Revenue Commissioners to consider mechanisms to enhance the level of information captured in respect of tax reliefs in order to facilitate work on evaluation and review. In addressing this requirement, I am, of course, conscious of the need to balance the needs of the Exchequer with the desire to minimise as far as possible the administrative burden on taxpayers in general and on the business community.