Tax loopholes remain top target

FINANCE Minister Brian Cowen says he will continue on the path of his predecessor Charlie McCreevy and close down loopholes in the tax systems.

Mr Cowen said yesterday there were many legitimate reasons for some tax incentives, but said abuse of these would be closed down.

"In the last number of years my predecessor Charlie McCreevy has brought in something like 19 legislative changes where he identified we needed to close off tax planning schemes that were being abused or had outlived their usefulness."

It was revealed recently that 11 people who earned in excess of 1 million a year had paid no tax on their income.

Though the schemes were perfectly legal, there have been repeated calls for avoidance schemes to be axed.

Speaking at the monthly meeting of the Leinster Society of Chartered Accountants yesterday he said making Ireland an attractive location in which to do business carries with it the responsibility of ensuring that "business is conducted in an ethical and proper manner", saying "damage can accrue from abusive tax avoidance measures."

Minister Cowen kept his budget cards close to his chest but said the upcoming announcement would seek to protect the country's economic competitiveness and avoid adding to inflationary pressure.

"Yes, our economy is vibrant.

"But the business of economic management is one where we can never let down our guard."

He said there remained threats to the economy, including oil prices, the weakness of the US dollar and competition for investment from other countries.

"Complacency is probably the greatest danger to sustained economic growth. At the heart of our success story has been our sharp focus on securing and advancing our international competitiveness," Mr Cowen said.

While tax revenues have surged ahead this year, meaning an extra 1 billion in the Department of Finance's purses, the minister would not say workers can expect a giveaway budget.

"It is important to point out there is an element of non-recurrence in tax revenues. It is important to that the buoyancy in revenues is reflective of an economy going well. What we have to do is not lie back on our oars we have to make sure we maintain this position."

He said the Government will still keep a tight rein on spending on public services, though he was committed to delivering on capital or infrastructure projects.

"It is important that we find a balance. Not everything can be a priority. The government is listing areas where we need further investment," he said.