Oireachtas Joint and Select Committees

Tuesday, 5 February 2019

Committee on Budgetary Oversight

Scrutiny of Tax Expenditures (Resumed): Dr. Micheál Collins

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance) | Oireachtas source

Is there potential for significant abuse in the area of capital allowances, deductibles and reliefs of various sorts in the corporate area? I am of the opinion that there is. How do we scrutinise such allowances to prevent abuse? I refer to company cars and supposed business trips which confer a very significant benefit on the traveller. Is it in the public interest for a businessperson to stay in a five star rather than a three star hotel? We need to drill down into the detail of reliefs and claims to ascertain whether the measures are being abused or the public interest is being served and the policy objective met.

Dr. Collins referred to assets. Assets may be valued in a particular way that suits the tax objectives of a corporation. I have seen company books which indicate that assets were valued at a certain level in one year and that in the next their value jumped or reduced. That has very convenient consequences for the company in terms of its tax liabilities. Is there significant potential for abuse in that area? I do not know the number of reliefs available, but it is substantial. How do we dig into the detail to get to the nitty gritty of whether these measures are justified, beneficial or effective?

I ask Dr. Collins to elaborate further on the issue of what is in the base and what is discretionary. I am curious about that matter because estimates of tax expenditures range from €5 billion. Dr. Collins referred to a figure of €21 billion. I asked about the €70 billion worth of allowances and deductions under the corporate heading alone. How do we ascertain what should reasonably be in the base? Given the paucity of information on these matters and the fact that the area has not been focused on, nearly everything needs to be looked at. We can then consider whether it is fair to put something into the base or if it needs further scrutiny.

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