Ahern defends relief schemes costing billions in lost tax
Under property-based schemes, tax incentives were offered to investors in order to spur development and lift the economy. But there has been widespread anger at the manner in which wealthy individuals availed of the schemes to reduce their tax bills.
High earners also availed of incentives in other areas, such as pension schemes. In two cases, individuals withdrew €25 million lump sums from pension funds without paying any tax.
The situation came to light after the Government published a review of 24 of the schemes on Monday.
Yesterday in the Dáil, Fine Gael leader Enda Kenny said the 24 schemes had cost the Exchequer 1.6 billion in the last five years, and stressed: "We haven't seen the final bill yet." The final bill in terms of tax foregone is likely to rise substantially.
Goodbody, which analysed four of the schemes on behalf of the Government, said those reliefs alone were likely to result in tax lost of €1.9bn by the time they expire later this year. Indecon analysed another 11 of the schemes and found they had already cost more than €450m.
When factored in with the remaining nine schemes which the Department of Finance and Revenue Commissioners reviewed internally, the bill is likely to be several billion.
But the Taoiseach defended the schemes, saying they had been introduced "for the best of reasons".
Concentrating solely on the amount of tax foregone, he argued, was the "purist economic view of mandarins who didn't really understand the real world" because it overlooked the fact that the schemes had spurred much-needed investment.
"If we had followed that view there would have been no schemes in this country and we'd be still a basket case," Mr Ahern said. But he agreed some schemes were "too generous".
Labour leader Pat Rabbitte said the issue with these particular schemes was that "they were allowed to go on, and on, and on" without any cost-benefit analysis.
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