Bertie Ahern (Dublin Central, Fianna Fail)

Can I respond to that set of questions before I leave? The Tánaiste will take over from me. A number of issues have been raised. I was asked to say what is the remittance basis of taxation. Individuals who are resident here, but who are not Irish-domiciled or not ordinarily resident here, pay tax here on the full amount of their Irish-sourced or UK-sourced income and also on that part of their foreign income — their non-Irish and non-UK income — that is brought into the State. That is the remittance basis of taxation.

Deputy Sargent asked about where the proposed level comes in. The examination showed that the difficulties and problems are caused by high earners — people earning over €250,000 per annum. The Revenue Commissioners' examination showed that there are some problems in that regard. That is why that figure was chosen. Such people were paying and doing things as per order.

The Revenue Commissioners stated in their report on the 400 individuals with the highest incomes that certain individuals have been using the relief for interest on loans to acquire interests in various companies. That relief was included in the general review of tax reliefs for that reason.

I assure Deputy Rabbitte that an employment under a foreign contract is deemed to be a foreign possession for tax purposes if the pay point is outside the State. The difference in figures can be attributed to the fact that the remittance basis has been more widely used. It is quite obvious that its extension and stretching out have been increasing. The figures are different because they are providing for a growing trend. The figure of €100 million is not based on the estimates for 2006 or 2007, but on a progression of increases in abuse. That is why there will be a yield of €50 million and then of €75 million. As I have said, they are estimates. The remittance basis has no effect on high earnings. It primarily affects non-Irish domiciled persons. I will return to the question of who it will affect.

I was also asked about interest relief. The original intention of interest relief in the 1970s was to encourage investment in companies and job creation by assisting employment-creating companies in the State. We can no longer easily distinguish between investment here and investment elsewhere in the EU. The relief has been restricted to investment in trading companies to stop it from going primarily to foreign property investment. It is easier to tie it down that way. Interest relief of 66% was obtained by persons with incomes in excess of €200,000. The remittance basis is relevant to the top 200 earners.

The Minister said in his Budget Statement that he proposes "to publish all the relevant reports reviewing these various tax reliefs in time for the Finance Bill". The remittance basis will also apply to Irish nationals who have come back after being abroad for several years. They will be able to use it for a three-year period.

In the 1980s, when income tax rates were very high, senior employers used different means and mechanisms of being paid through God knows where to get reliefs here. That was a standard enough practice at that time. Our current tax rates are very attractive internationally. I hope no employers are behaving in the manner suggested. In any event, the last two heads of Intel, for example, were Irish. The phenomenon of senior people in our top companies, such as Dell, being Irish is increasingly notable. It was not that way when tax rates were high. There is an attraction. If senior people are operating in the manner that has been highlighted — Deputy Paul McGrath was right to suggest that some senior people are probably finding that they can do it on that basis — they should not be doing so, in my view. Why should people who are earning €300,000 or €400,000 get away with organising their affairs through Germany and paying a few euro here for their bed and breakfast and their dinner? The person down on the bottom floor, who is looking after the door and watering the plants, is paying tax, so que sera——

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