Gay Mitchell (Dublin South Central, Fine Gael)
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Question 260: To ask the Minister for Finance his views on the concerns of a person (details supplied) on the effect of capping the amount of tax relief; and if he will make a statement on the matter. [8217/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am aware of the concerns of the person referred to by the Deputy and have received representations from others regarding the inclusion of the donations scheme in the list of specified reliefs to be covered by the new restriction on the use of tax reliefs, which is due to come into effect on 1 January 2007. The issue was also raised during Committee Stage of the Finance Bill last week and there were differing views within the committee on the question. The most recent Revenue Commissioners report on the effective tax rates for those on high incomes for the tax year 2001 revealed that the donations scheme is one of the schemes being availed of by such taxpayers to reduce their effective tax rates to very low levels. Omitting the scheme from the specified reliefs list, as has been suggested, would reduce the effectiveness of the restriction, the aim of which is to increase the effective tax rate of those on high incomes towards 20%. Given the concerns that have been raised, I have undertaken to consider the matter further between now and Report Stage of the Finance Bill. Given the proportion, even of high earners, who will be affected by the relief restriction is relatively small, the effectiveness of the tax relief incentive for charitable donations will be unaffected in most cases.