Richest Irish reduce tax bill by claiming €290m in reliefs

OVER 400 of the country’s richest people reduced their tax bills significantly in 2007 by availing of almost €290m in tax reliefs, new figures have shown.

Labour said the scale of tax foregone for those involved was “absolutely staggering”, with some making savings of more than €1m each.

Of the total of 439 individuals involved, 214 earned €500,000 or more in the year in question while the other 225 earned up to €500,000.

The figures show that the 439 claimed just under €290m in tax breaks and shelters between them, availing for example of reliefs available for investments in hotels, nursing homes and hospitals.

The reliefs meant that their effective tax rate was far lower than many ordinary PAYE workers.

For instance, the 214 earning €500,000 or more in 2007 paid an average effective tax rate of just 20.08%. In contrast, that same year, a single PRSI worker paid 20% on the first €34,000 of his or her earnings and 41% on the remainder.

The average effective tax rate was even lower for the 225 earning up to €500,000. They paid an average rate of just 13.63% – and in 77 of the 225 cases, the individuals involved paid between just 0% and 10%.

Labour finance spokeswoman Joan Burton said the figures were a “graphic illustration” of the extent to which some of the wealthiest people in the country were able to minimise their tax liabilities.

“A characteristic of Fianna Fáil in government since 1997 has been the extent of its generosity to the highest earners with tax breaks and shelters, many of them relating to property. Of course it was other taxpayers who were footing the bill for this pot of gold for the wealthy.”

Ms Burton expressed hope that the forthcoming report of the Commission of Taxation would “put a final nail in the coffin” of these sort of reliefs and shelters. That report will feature a range of recommendations to Government on how to increase the tax take.

However, the Department of Finance stressed it had already reduced the extent to which high earners were able to avail of reliefs to cut their tax bills.

The department said it had introduced measures that took effect from January 2007 and which served to limit the use of certain reliefs and exemptions.

The outcome of this was many of the high earners actually paid more tax in 2007 than they would have done previously. The department said the restrictions meant an extra €39.8m in tax had been claimed from the 439 individuals involved.