Joan Burton (Dublin West, Labour)
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Question 97: To ask the Minister for Finance the steps he is taking to carry out an assessment of various tax reliefs, especially property-based reliefs, to establish whether they are making a significant contribution to the economic life of the country or simply allowing high earners to reduce or eliminate their tax liability; and if he will make a statement on the matter. [29841/04]

Brian Cowen (Laois-Offaly, Fianna Fail)
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All major tax incentives-expenditures are kept under review by this Government, especially in the context of the annual budget and Finance Bill process. It is widely acknowledged that there are legitimate and reasonable reasons for tax reliefs as a general principle and few would argue that these tax relief provisions have not made a significant contribution to the economic life of the country. Successive Governments have introduced them for a range of purposes such as regenerating inner cities, improving tourism prospects in areas where the potential was not being realised, developing industries such as the film industry and providing seed capital for small businesses. I would add that the economic aspect is only part of the picture one must look at when assessing tax reliefs: societal, cultural and environmental effects are also important and should not be discounted or ignored.

Our estimates of the costs of the ten highest costing reliefs show these to include pension contributions, stamp duty and capital gains tax exemptions on one's home, mortgage interest relief, non-taxation of child benefit, medical insurance relief and the special savings accounts. These cannot be characterised as tax shelters for high earners.

There are many reasons a person would have a nil liability. This can arise from the cumulation of tax relief for pension contributions, trading losses carried forward, capital allowances and various tax reliefs. It must be accepted that tax reliefs, even where they can be justified for good public policy purposes, will reduce the tax bills of those in the higher income bracket.

I am conscious of the need to ensure equity in the tax system. Since 1998, this Government has made 29 separate and effective moves to limit reliefs, re-focus allowances, close off loopholes and ensure that a proper balance is struck between the provision of particular incentives for good public policy reasons and the availability of opportunities for higher earners to reduce their tax exposure. I will continue this policy. To that end, all reliefs and incentives will be kept under review to ensure that they are fulfilling the purpose for which they were intended.

As I have recently informed the House, the Revenue Commissioners are introducing a number of changes to certain tax forms which will yield additional information regarding the cost of reliefs. This is part of ongoing commitments to improve the quality of information available on the costs of tax expenditures generally. Provisions were included in the Finance Act 2004 to underpin these changes. This will provide better data in this area and enable fuller estimates of the tax foregone to be made over time.