Dr. Micheál Collins:

I will see if I can remember all those questions as I work through them. I agree with Deputy Broughan regarding finance Bills, which are very much the focus for tax expenditures. Sometimes they are mentioned on budget day but really the detail for these measures appears in finance Bills either as new tax expenditures or as extensions to tax expenditures. It is very welcome that a committee like this is in place as it provides an opportunity over time to examine and reflect on those decisions. As members are well aware, the budgetary process tends be very rapid. It is great to have a space such as this to allow some reflection on that. As easily as we are happy to create tax expenditures, we should be able to take them away if that is the case. Clearly, it is more difficult to take things away, particularly when people benefit from them but, nonetheless, we should be able to do so.

Regarding the Deputy's point about the potential for new measures, the ideal is that we would reflect on those before we adopt them. In other words, we would align them to the criteria set by the Commission on Taxation. Suggestions made by the commission heavily influenced the criteria subsequently put together by the Department of Finance. I note a very good summary of all that in the document produced recently by the Parliamentary Budget Office. We should be thinking about the potential costs of any measure and its likely effectiveness. The reality is that when we introduce a tax expenditure, there is an inherent inequity in it in that we are reducing the tax that one individual or company is paying relative to equivalent individuals who are not in a position to avail of that tax break. If we are doing that, we need to be pretty clear that it is worthwhile. That brings us to back to the question of whether the overall benefits to society are greater than the costs. Those questions need to be asked.

At times, one can argue that if there is insufficient time to ask those questions in the run-up to a budget, and I accept these things can happen quite rapidly at times, there is no reason we cannot return to them shortly afterwards as the schemes are up and running and begin to analyse whether they work or are worth continuing. In that sense, I agree that we should always have a sunset clause on every tax expenditure. Indeed, that was the recommendation of the Commission on Taxation. Even if it is the most brilliant tax expenditure in the world that makes perfect sense, we should still review it to be sure that is the case. Therefore, as well as having a sunset clause, we should have a built-in mechanism for a review of all of these tax expenditures on a recurring basis.

I would be happy if the Acting Chairman would allow me to come back to the committee with a more comprehensive answer to the Deputy's request to break down the tax expenditure. I will explain the figure of €21.4 billion. I would regard that as all items that are discretionary. Perhaps the least discretionary element might be personal tax credits for PAYE workers or the self-employed but they are discretionary because we can change them at budget time, even if it is generally upwards. We could decide to alter them dramatically, which would be a major step to take. They are discretionary but, as the Deputy mentioned, they may be slightly less discretionary than the ones that are a little more controversial that one might think of as having full discretion. I am very happy to come back to the committee and provide a more comprehensive breakdown if I am permitted to do so.

Regarding the Deputy's final comments, when we look at other countries, we can see that making comparisons across countries is very difficult. The OECD attempted to do this when it produced a report in 2010 that made some comparisons. A subsequent paper by Mary Walsh and me, who are both members of the Commission on Taxation, slotted Ireland into that comparison to see where we were. The great difficulty with taking the headline figures from France, Germany or other countries involves what they count and how they count it. That can provide quite misleading comparative figures. It comes back to a problem for our tax systems, which is that these tax expenditures have appeared and grown over time and as they grow, we have not watched them sufficiently to see whether they work and understand the distributive aspects of them and the appropriateness or otherwise of their erosion of fairness, which is ultimately the structure and what they do.