Cowen urged to close off tax loopholes

TAX officials have called on Finance Minister Brian Cowen to deliver on his pledge to close off the loopholes that allow thousands of rich people off the hook or to pay minimum tax.

Mr Cowen promised a review of tax allowances in his first Budget, according to IMPACT's tax officials branch president Geraldine O'Brien. Now ordinary PAYE taxpayers expect the loopholes for the rich to be closed off, she told the branch's annual conference in Athlone yesterday.

Ms O'Brien, who represents over 1,300 tax officials working in the Revenue Commissioners, said there has been a focus on a small number of super-rich who pay no tax, but this is just the tip of the iceberg. "Focusing attention on those who pay no tax is important but don't ignore thousands of others who strategically place themselves outside the glare by making a minimal tax contribution," she added.

Ordinary taxpayers now expect action on foot of the minister's promised review of the tax incentive schemes, said Ms O'Brien.

"Hard-working law-abiding PAYE taxpayers want action - they want this stopped and they will be watching the minister with keen interest," she added.

The Irish Congress of Trade Unions (ICTU) published an analysis last year which showed almost a quarter of top 117 earners pay no tax because of legal tax avoidance measures like owning racehorses or property.

Another third of the top 400 earners used similar schemes to pay tax of less than 9%. This compares to the 42% income tax burden - plus indirect taxes - on most ordinary workers.

Most of these tax incentives made sense at their inception and many still make sense. "What doesn't make sense is the passive investor who is permitted to avail of these incentives, without restriction, for the sole purpose of tax planning," she added. Mr Cowen's spokesman said the minister hopes to make an announcement on measures to close off these tax loopholes by the next Budget. "The minister and the Revenue are examining these schemes to see how the loopholes can be cut off," his spokesman said.

Tenders have been sought from consultants who will show how property and area-based tax schemes can be closed off, the minister's spokesman added.