Mr. Ger Gibbons:

I am happy to respond to that. Regarding the entrepreneur relief, when this scheme or tax break was introduced, it was estimated it would cost approximately €27 million per year. The cost for the latest year for which data are available is approximately €93 million, or more than three times as much as the estimated cost. That was claimed by just over 900 taxpayers, so the average is roughly €100,000 per year.

The total cost in the four years to 2020 was approximately €360 million, so it is an expensive tax break.

Our criticism of this relief is that the recommendations relating to it do not seem to take into account the substantial critique of this break that was included in a 2021 ESRI report on options for raising revenue in Ireland. The ESRI's essential conclusion was that this tax break was more likely to promote efforts to avoid tax on retirement than to encourage genuine investment. The recommendation in chapter 9 also refers to the Department of Enterprise, Trade and Employment's Report of the SME Taskforce: National SME and Entrepreneurship Growth Plan, which was published in 2021. In its report, the commission recommended that entrepreneurs relief be extended to third-party investors. However, that growth plan recommended a reduced rate of 20%, not the 10% that is currently available to investors in non-property SMEs. If we look again at the figures for the breakdown of how this tax break is allocated, we can see that 24% of the cost in 2020, or €22 million, went to real estate activities, and approximately €80 million went to those activities in recent years. The main point is that one of the principle justifications for this relief is that other tax reliefs that are discussed in this chapter and are not effective. For example I think it makes reference to the investment incentive scheme. It does not seem to be a good justification for expanding this relief that others do not work. That is our principle concern about that relief.