Brian Cowen (Laois-Offaly, Fianna Fail)

I am never surprised by Deputy Burton's ability to concoct a conspiracy where none exists. I had no say regarding the methodology used in respect of this study. It was the sole preserve of the Revenue Commissioners, who are independent. Deputy Burton should desist from imputing a dishonourable motive on my part because it detracts from her argument.

Regarding the issue of deposit interest retention tax raised by Deputy Burton, the Revenue Commissioners have advised me, in respect of their recent report on effective tax rates of high earners, that for the small number of taxpayers whose income consists of very large sums of deposit interest, the amount of DIRT deducted means that their effective rate of income tax paid was very close to the 20% standard rate at which DIRT is deducted from deposit interest. This is because DIRT deducted at the standard rate is a final tax. The taxpayer has no further liability to income tax on the deposit interest concerned. Like similar taxes, deposit interest retention tax is a form of income tax. As far as the Revenue Commissioners are concerned it is, therefore, appropriate to include it in such studies on tax paid by those on high incomes. The fact that this was not done in the past was an oversight which is now being corrected.

The idea that the change in methodology will not show the numbers of people with a 0% effective rate of tax is not correct. Essentially, the change being made is about accuracy of information and ensuring that taxpayers are correctly categorised into the different bands of effective rates. Future studies will show high earners who have a 0% effective rate of tax.

The recent study makes it clear that, with regard to the proposed new methodology for future studies, "individuals paying some tax, although amounting to an effective rate of 1%, will be excluded from the 0% range and included in the less than 5% range". To facilitate comparisons, tables 3A, 3B and 4 in annex 1 recast tables 1A, 1B and 2, respectively, to show the numbers and percentages on the basis of the methodology that will be used in future. Table 4 in annex 1 of the study shows that the number of high earners with a 0% rate effective rate, if any, will be identified in future studies as they have been in this most recent study. In future, those who pay no tax at all will be in the 0% category, those paying some tax but less than 5% will be included in the greater than 0% and less than 5% category.

Regarding other aspects of Deputy Burton's question, we are talking about the use of tax incentives and reliefs introduced by successive Governments for the purpose of economic and social development. We need to achieve a balance in the budget between incentivising economic and social development and ensuring that everyone pays his or her fair share. This was not done during the tenure of the rainbow coalition. This Government has closed down a range of schemes introduced by the rainbow coalition.

The measures and schemes to which I refer include: the designated seaside resort scheme, which was introduced in 1995 — I wonder who was Minister for Finance at that stage; the Customs House docks area scheme introduced in 1985 — I do not believe there was a Fianna Fáil Minister for Finance then; the designated islands scheme introduced in 1996 — I believe a Labour Minister for Finance was in office at that time; a double rent relief element in respect of the various tax designated area schemes introduced under the original urban renewal scheme of 1985; and foreign earnings income tax relief, which was introduced in 1994. I cite these examples in respect of bringing a measure of balance and accuracy to the debate.

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