The Minister for Finance, Mr Cowen, has written to five county councils in the upper Shannon region asking them to make their case for the extension of the Upper Shannon Rural Renewal Tax relief scheme.
The tax reliefs, which apply to the construction of new buildings as well as the refurbishment of existing homes, has fuelled dramatic growth, particularly in housing in the region.
The areas covered by the Upper Shannon Rural Renewal Scheme include all of counties Leitrim and Longford, parts of west Cavan, north Roscommon and east, south and northeast Co Sligo.
While new housing has been the principal growth area, the scheme also applies to industrial and commercial properties. Tax relief is available to both owners and occupiers of the properties.
It was introduced by the Government in 1998 initially for a three year period to encourage regeneration of the region but was extended for a further two years by the former minister for finance, Mr McCreevy. It is due to expire on December 31st next.
However, the scheme has been criticised by conservationists and An Taisce who say it promotes one-off houses in the countryside while others have argued it principally benefits wealthy people who do not live in the region and who simply buy the properties to claim the tax reliefs.
An Taisce particularly has been critical of owners who buy properties unseen purely for the tax break and warned many new homes might remain empty.
While towns like Carrick-On-Shannon in Co Leitrim have seen dramatic growth in the numbers of new houses and apartments the critics suggest the tax-breaks are leading to an oversupply of housing, which could cause a collapse in the housing market and unemployment in the building industry when the scheme ends.
The local authorities are however keen for the reliefs to be extended and many backbench TDs have lobbied the Government on the issue.
A Department spokesman was unable to comment on the Minister's attitude to the tax-breaks yesterday. In his letter to the five county councils, the Minister asks that they outline the case for the extension of the tax-breaks.
The move comes in the light of a Government review of all allowance schemes which help the wealthy to reduce their tax bills.
In addition to reliefs for the Upper Shannon region there are reliefs available for urban and rural regeneration in all regions on a "street by street basis" drawn up by the Department of the Environment.
Similar reliefs are or have been available for seaside resorts and other holiday accommodation; student accommodation and nursing homes as well as car parks and heritage properties.
The Shannon scheme covers; in Co Cavan areas west of the River Erne, and some areas immediately east of the Erne, all of Leitrim and Longford, north Roscommon, and areas in the east, south and northeast of Co Sligo.