Dáil Éireann díospóireacht -
Tuesday, 30 Sep 2003

Vol. 571 No. 1

Written Answers. - Tax Code.

Brian O'Shea

Ceist:

198 Mr. O'Shea asked the Minister for Finance the steps he is taking to reduce the tax avoidance schemes, having regard to figures published showing that 51 of the top 400 earners paid tax of less than 5% in 2000 and 29 of them did not pay any tax at all; and if he will make a statement on the matter. [20762/03]

Minister for Finance (Mr. McCreevy)

Since taking up office as Minister for Finance in 1997, I have acted swiftly on several occasions to control particular abuses of the tax legislation that serve to narrow the tax base. Indeed, the 2003 Finance Act contained a series of such anti-avoidance measures. I have also taken a succession of steps to reduce the opportunities for the kind of tax avoidance schemes to which the Deputy refers. These are particularly geared to reduce the opportunities for very high earners to pay relatively low effective rates of tax.

The figures referred to by the Deputy are extracted from a study carried out by the Revenue Commissioners in 2002 on the effective tax rates for high earning individuals based on the tax year 1999-2000. A similar study was undertaken in 1997.

One of the conclusions drawn from the 1997 study was that the use of capital allowances on the expenditure on buildings in tax designated areas and on hotels was one of the main methods of reducing the tax bills of high earners to very low levels. I subsequently capped in December 1997 in my 1998 Budget the amount of annual capital allowances on such buildings that could be set-off against non-rental income and, in the case of hotels throughout most of the country, I abolished in total the capital allowances against non-rental income.

In the case of the 2002 study by the Revenue Commissioners, which related to 1999-2000, it was noted that some individuals were still able to avail in 1999-2000 of the pre-1998 budget legislative provisions because of the normal transitional measures associated with the budget changes. The impact of these transitional measures has been declining in the intervening years and will eventually cease.

In my last budget, I have also abolished capital allowances for investment in registered holiday homes and reduced capital allowances for hotels to the rate applying generally to industrial buildings. I have also indicated that a range of tax incentives will not be extended beyond their end-2004 termination date.

In addition to these measures the Revenue Commissioners are also restructuring their efforts to focus more on maintaining and improving tax compliance. In this regard, a large cases division has been set up and a high wealth individuals business unit has recently been constituted in order to monitor and research behaviour patterns in relation to tax avoidance and evasion in this area.

Joe Costello

Ceist:

199 Mr. Costello asked the Minister for Finance the proposals he is considering for the introduction of carbon taxes; the steps which will be taken to ensure that such taxes do not impact disproportionately on those on low incomes; and if he will make a statement on the matter. [20746/03]

Minister for Finance (Mr. McCreevy)

As the Deputy will be aware, and following on my Budget Statement regarding carbon energy taxation last December, a carbon energy tax consultation paper was prepared by my Department in July of this year. This consultation paper was designed to facilitate discussions on the introduction and design of the carbon energy tax while recognising that there are divergent views on the issue. Submissions in response to the paper were invited from interested parties to be received in the Department of Finance by today, 30 September 2003.

All relevant issues, including the effect of carbon energy tax on those on low incomes will be taken into account in the consideration and development of the proposal.