Cost to Exchequer of many tax relief schemes is unknown

The cost to the Exchequer of more than 20 different tax relief schemes is not known, according to Labour Party spokeswoman on finance Ms Joan Burton.

Ms Burton has called on the Minister for Finance, Mr McCreevy, to initiate an immediate audit to establish the cost of the reliefs and to conduct a cost-benefit analysis of the reliefs once the necessary information is available.

"It is simply astonishing that, at a time of falling tax revenue, Minister McCreevy is unable to tell us just how much these reliefs - which are generally only availed of by the well-off - are costing the rest of the taxpaying public," Ms Burton said.

She said the issue was not ideological but a question of sound economic sense.

"Our tax regime gives away generous benefits to a generally small number of people, without knowing what it costs."

Ms Burton said "directed incentives" using the tax system could be justified but there were too many directed at the property sector at a time when the sector was already buoyant. She said there were concerns that this fed into building cost inflation and the cost of infrastructural developments and family homes.

She also criticised the fact that there would be no survey conducted this year of the actual rate of tax paid by high-income individuals. Such a survey was carried out last year and another is expected next year.

A study by the Revenue Commissioners of the State's top 400 earners in the year 1999/2000, found that 18 per cent had an effective tax rate of less than 15 per cent, compared to 20 per cent for the average PAYE worker. It found that 51 of the 400 paid an effective rate of less than 5 per cent, while 29 paid no tax at all.

The fact that no estimates exist of the extent of the taxes forgone as a result of various relief schemes was revealed to Ms Burton in a series of Dáil questions she put to Mr McCreevy.

The tax relief schemes for which data is unavailable are: commercially managed woodland; stallion and greyhound stud fees; childcare facilities; student accommodation; third-level institutions; private hospitals; sports injury clinics; park-and-ride facilities; rural renewal; town renewal; living above the shop; airports; hotels; nursing homes; private convalescent homes; housing units for aged and infirm; compensation for personal injuries; tax relief on retirement relief for sportspersons; deductions of foreign earnings; donations to sports bodies; investment in life assurance undertakings; offshore life and collective investment products; and rent-a-room scheme.

Mr McCreevy told Ms Burton that there were no significant costs attaching to the following schemes: savings-related share options; employee share-ownership trusts; and a new scheme for approved share options.

A spokeswoman for the Minister said the issue of tax reliefs was one in which Mr McCreevy took a special interest and that such schemes were constantly being re-assessed.

She said that, from time to time, detailed revisions of particular schemes were carried out. She pointed out that, from next year, returns on income would have to be made by persons earning income from stallion and greyhound fees and from commercially managed woodland.

She also pointed out that relief on student accommodation would be abolished from December, while the urban renewal and rural renewal schemes would expire at the end of 2004. The desire to have data on the cost of certain schemes had to be balanced with the desire to simplify taxpayers' returns, she added.