There has been much comment in recent weeks on these figures and the fact that a very small number of high earners have managed to pay little or no tax through the use of tax incentives. Therefore, I take this opportunity to put the figures in their correct context. Of the 270 PAYE income earners on €500,000 or more per annum, 263 were liable to tax at the 42% rate, one was liable at the 20% rate and nine had a nil net income tax liability. Of the 590 self-employed income earners on €500,000 or more per annum, 552 were liable to tax at the 42% rate, six were liable at the 20% tax rate, and 32 had a nil net income tax liability.
On tax reliefs in general, all Governments have generally introduced or continued various tax reliefs with the aim of stimulating investment in particular sectors of the economy or in particular regions. Such investment has led to employment creation or maintenance, as well as improving the capital stock of buildings, for example, in the hotels sector or in various cities and towns under the urban renewal and town renewal schemes. However, it is accepted that these reliefs, no matter how desirable, narrow the tax base and will, of their nature, have the effect of reducing the tax paid by high earners.
As I stated, there can be many reasons some persons can have a nil liability to income tax. This can arise from the accumulation of tax relief for pension contributions, trading losses carried forward, capital allowances on business investments, charitable donations and various property-based tax reliefs. These tax reliefs are incentives that were introduced purposely by successive Governments, including the rainbow Government, to stimulate investment.
On the question of golden circles raised by Deputy Burton, I do not know the identity of members of such circles. The Deputy knows their affairs are confidential to the Revenue Commissioners. To use the term "golden circle" is unworthy and takes from the argument.
It is worth noting that the ten most costly reliefs cover items such as pension contributions, stamp duty and capital gains tax exemptions on one's home, mortgage interest relief, non-taxation of child benefit, medical insurance relief and SSIAs. These reliefs are widely used by all classes of society and the cost pertaining thereto amounts to more than €5 billion. They are not tax reliefs that should be characterised or referred to as reliefs for the rich.
This Government has a strong record on closing off and limiting reliefs, where necessary, to promote tax equity. Prominent in this regard was the cap of €31,750 on tax relief applied in the 1998 budget, which will progressively limit the tax loss involved. In the 2003 budget the former Minister announced the termination of various property and investment reliefs. The termination date was extended in the 2004 budget and Finance Act to provide for an orderly winding down of the various existing schemes. These schemes will terminate on 31 July 2006, with only pipeline projects qualifying, subject to certain conditions being met. To answer the Deputy's question, obviously the schemes will be kept under review.
