Eamon Gilmore (Dún Laoghaire, Labour)
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Question 48: To ask the Minister for Finance if his attention has been drawn to the "Prime Time Investigates" programme, transmitted on 23 May 2005 which highlighted a whole range of tax shelters and schemes available only to the well-off; if his attention has further been drawn to the concerns among ordinary PAYE taxpayers of the extent to which others are able to minimise their tax liability through the use of these schemes; and if he will make a statement on the matter. [18270/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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As the Deputy may be aware, I appeared in the programme to which he refers. I would have to point out that tax reliefs are not available solely to the well off. In fact, many of the costliest reliefs in terms of tax foregone are widely availed of by all or several classes of taxpayers, for example, the exemption of child benefit from income tax, employer and employee pensions costs relief, mortgage interest relief, medical insurance and health expenses relief, and normal business capital allowances in lieu of depreciation.

I also refer the Deputy to the recent Revenue Commissioners' report on the effective tax rates of the top 400 earners, which I had placed in the Oireachtas Library. It covers the short tax year 2001 and indicates that between 1999-2000 and 2001, the number of high earning taxpayers with an effective tax rate of less than 15% decreased by 3.75 percentage points while those with an effective tax rate between 15% and 29% increased by 3.25 percentage points.

This upward movement in effective tax rates indicates that measures such as the capping of capital allowances available to passive investors were having an increasing impact. The increase in effective rates took place despite the 4 percentage points reduction in the standard and top income tax rates, from 24% to 20% and from 46% to 42%, respectively, over the period.

As the Deputy knows, I announced in budget 2005, that my Department, in conjunction with the Revenue Commissioners, would undertake this year a detailed review of certain tax incentive schemes and tax exemptions. This review is under way and the information contained in the latest Revenue report will provide a valuable input to that important policy review. It will also evaluate the impact and operation of certain reliefs including their economic and social benefits for the different locations and sectors involved and to the wider community. In addition, the review will examine the degree to which these schemes allow high income individuals to reduce their tax liabilities.

Both the consultancy studies and the internal Department of Finance and Revenue Commissioners studies will consider additional restrictions that might reasonably apply if needed, to limit the extent to which high income individuals can use these reliefs to reduce their tax liability.