Not enough work to establish true cost

THE Revenue Commissioners yesterday admitted it had not done enough to establish the true cost of billions in controversial tax breaks.

Although new measures to capture the cost of such tax reliefs will be introduced, the Revenue will not be able to produce a final estimate before 2007.

Speaking before the Oireachtas Finance and Public Service Committee yesterday, Revenue chairman Frank Daly conceded the organisation had not done enough in the past to pin down the cost of tax incentives.

“There are many areas where information is not available and where we acknowledge it’s past time that it should be,” he said.

On Tuesday Revenue figures revealed 28 tax breaks were costing over €8 billion annually.

However, neither the Revenue nor the Department of Finance has any idea how much a further 33 tax breaks - including those for stallion stud fees and foreign trust income - actually cost.

Outlining new plans to capture information on tax reliefs, Mr Daly said all tax returns from 2004 onwards would compel those availing of reliefs to provide information on how much tax was being forgone.

But since this year’s tax returns are not due until late in 2005, a full picture will not begin to emerge before the end of 2006.

Questioned by Committee members, Mr Daly declined to speculate on measures which may ensure a fairer spread of the tax burden since the matter was one of policy for the Government.

However, Committee chairman and Fianna Fail TD Sean Fleming said the current system was unfair and called for an effective minimum tax rate to ensure all earners paid some level of tax.

“Most people in Ireland would take the view that high earners...should not be getting away with a nil liability to tax,” he said.

Labour finance spokesperson Joan Burton criticised the manner in which many tax breaks were introduced to help big business and the wealthy.

Deputy Burton said a tax relief on investments in private hospitals had been introduced on foot of a single letter from a doctor in former Finance Minister Charlie McCreevy’s constituency.

Deputy Burton also said a single phone call and letter from the Irish Hotels Federation had resulted in incentives for investors in the hotel industry.

Mr Daly agreed that consideration of the impact and justification for a tax relief before introducing it would be a sensible move. However, he stressed such a policy change was a matter for Government. “As a general principle I don’t have any difficulty with premodelling but at the end of the day, it’s not my call,” he said.

Institute of Chartered Accountants chief executive Pat Costello also stressed that decisions on tax reliefs were a matter for Government. “Tax advisers and accountants can only be guided by what the law says and we don’t decide the law,” he said.