Tax relief schemes for rich scrapped

Wealthy individuals will no longer be able to use tax relief schemes to avoid paying any tax, it emerged tonight.

The Government had been stung by criticism that some of the richest people in the county had reduced their tax bills to zero by investing in hotels, car parks and holiday homes.

Minister for Finance Brian Cowen announced that he was ending a range of property-based tax incentive schemes.

“My basic aim is to see that everybody pays an appropriate amount of income tax relative to their ability to do so. This is a cornerstone of tax equity,” he said.

It means the end of the Urban Renewal Scheme, the Rural Renewal Scheme, the Town Renewal Scheme and tax reliefs on hotels, holiday cottages, student accommodation, multi-storey car parks, third-level educational buildings, sports injury clinics and park-and-ride developments.

However, Mr Cowen said he was giving a five-month extension to projects already in the pipeline to avoid disrupting construction activity.

He said he was introducing an annual overall cap on the use of tax relief schemes for individuals earning over €250,000.

“We cannot stand over a situation in which some high-earning tax residents, through the use of incentive reliefs, can reduce their taxable income to nil. This is simply not a fair situation, although I should point out that high-earning non-payers are in a very small minority,” he said.

People earning more than €250,000 will only be able to put half their income towards tax relief schemes and will therefore face a minimum tax rate of 20%.