ICTU questions backdated tax relief on share options

The Irish Congress of Trade Unions has expressed strong concerns about the decision to make retrospective a tax relief measure for persons holding share options.

An amendment to the measure concerning share options by the Minister for Finance, Mr McCreevy, means individuals sitting on unexercised options, possibly going back several years and worth significant sums, will make very large tax savings.

"ICTU is very concerned that the Minister should make retrospective what is a potential mechanism for tax avoidance," said a spokesman for the trade union body. "We would question why the Minister has taken this step."

A spokesperson for the Minister was not available for comment. The measure reduces the liability on income arising from share options from income tax at 42 per cent, to capital gains tax, at 20 per cent. Originally it was to apply only to options granted after the publication of the Finance Bill. The Bill was published in February.

ICTU had already been concerned about the measure because of the potential it says it has to convey huge tax benefits to senior executives of major firms.

Approved schemes have to make at least 70 per cent of options involved available to all employees. However, this still leaves scope for huge benefits for key senior executives, such as chief executives, according to ICTU.

The Minister has introduced a number of amendments to the Finance Bill during Committee and Report stage. They include capital allowances for the provision of acute private hospital facilities, general reductions in stamp duty rates for non-owner occupier purchases of new property and a provision not to proceed with a proposed anti-speculation tax announced last summer.