Mick Wallace has been forced to break ranks with a group of independents over his tax affairs.
The property developer-turned-politician last week admitted his company under-declared VAT and came to a €2.1m settlement with the Revenue Commissioners.
But he maintained he is not personally liable to make the payment as it is company debt, adding the bill may never be settled as the firm – MJ Wallace Ltd - is now insolvent.
In a statement, 10 members of the Dail’s Technical Group said: “After requests from independent members of the Technical Group to Deputy Mick Wallace that he step back voluntarily from the group forthwith as a result of last week’s revelations regarding his tax affairs, he has today agreed to do so.”
The controversy appears to have split the group, with Joan Collins, Richard Boyd Barrett, Joe Higgins and Clare Daly – who believes Mr Wallace is fit to serve – not signing the statement.
Two independents – John Halligan and Seamus Healy – have called for the Wexford TD to resign his seat.
Meanwhile Ceann Comhairle Sean Barrett has declined a request from Mr Wallace to make a personal statement on his tax affairs and his political future to the Dail tomorrow.
Mr Barrett decided the issue does not fall within the remit of the section of Dail Standing Orders cited by Mr Wallace in his request.
The Dail chairman also requested an ethics investigation be launched after the independent deputy admitted he lied to the taxman by under-declaring his VAT by €1.4m on apartment sales.
The Members’ Interests Committee will meet on Wednesday to decide if it can probe the issue.
Mr Wallace cancelled plans to go to Poland this weekend to see Euro 2012 football over the controversy.
He had admitted he was wrong when his building company knowingly under-declared VAT, which, with interest and penalties piled on, rose to some €2.1m.
The politician maintained the decision was made to save jobs at his failing construction firm.
The Technical Group has formally requested the Government Chief Whip, Paul Kehoe, to schedule time this week to address this matter.
A total of 16 independent and left-leaning TDs formed a pact after the last election – called the Technical Group – to ensure speaking rights in the Dail.
Those who signed the statement requesting Mr Wallace step aside included Stephen Donnelly, Luke “Ming” Flanagan, Tom Fleming, John Halligan, Finian McGrath, Mattie McGrath, Catherine Murphy, Maureen O’Sullivan, Thomas Pringle and Shane Ross.
Three independent TDs, Michael Healy-Rae, Michael Lowry and Noel Grealish, are not part of the Technical Group.