Brian Cowen (Laois-Offaly, Fianna Fail)

The recent Revenue Commissioners' report on the effective tax rates of the top 400 earners, which covers the short tax year 2001, indicates that between the years 1999-2000 and 2001, the number of high earning taxpayers with an effective tax rate of less than 15% decreased by 3.75%, while those with an effective tax rate between 15% and 29% increased by 3.25%.

This upward movement in effective rates indicates that measures such as the capping of capital allowances available to passive investors continued to take hold. The increase in effective rates took place despite the 4% reduction in the standard and top income tax rates, from 24% to 20% and from 46% to 42%, respectively, during that period.

Despite the increase in the effective tax rate for many high earners, some continued to reduce their tax bill to zero. This, however, is not a new phenomenon as all of the previous tax years examined by the Revenue Commissioners, starting with the tax year 1993-94, indicated that a number of individuals had recorded a zero rate.

As the Deputy will be aware, in budget 2005, I announced that my Department, in conjunction with the Revenue Commissioners, would this year undertake a detailed review of certain tax incentive schemes and tax exemptions. This review is under way and the information contained in the latest report of the Revenue Commissioners will provide a valuable input to that important policy review. Until the review is complete and I have considered the matter, I do not propose to make any comment on what steps I may take in this area.

See this speech in context