As the Deputy is aware, Revenue carried out a survey of effective tax rates, that is the final tax bill as a percentage of gross income, paid by high earning individuals in 1997. That survey revealed that, while the vast majority of high earners did pay very substantial amounts of income tax, some were able to reduce their effective tax rates to very low levels. It was clear from the 1997 survey that the open-ended availability of capital allowances for passive investment in certain tax-favoured buildings, such as hotels and buildings located in tax designated areas, was a prime factor in contributing to the low effective rates in these cases. Accordingly, I acted in the budget of that year to close off these shelters for individual investors in the case of hotels and to cap them at £25,000 in the case of buildings in tax designated areas.
While the Revenue Commissioners have not conducted a similar survey since the 1997 exercise, they monitor the use of various tax incentives on an ongoing basis, both as regards the cost of those incentives and the categories of persons, including high earners, who use them. Revenue also monitor tax returns for evidence of avoidance schemes, which tend to be availed of by high earners.
Indeed, as a result of information provided by Revenue in this regard, I acted in this year's Finance Bill to close off further schemes involving passive investment through general partnerships which benefited mainly high income individuals.
Revenue have no plans at this stage for conducting a further survey of high earners, along the lines of the 1997 exercise, during the year 2000. However, they will continue to monitor closely the position of high earners and will consider whether another survey should be carried out.