Reports that U2 have moved a big part of their multi-million euro business empire out of Ireland to avoid tax was greeted with disappointment by politicians who said it appeared to fly in the face of Bono's calls for more Government spending on the developing world.
"It seems that Bono wants ordinary Irish taxpayers to give more to the third world while he opts out of paying the small proportion of his income that would have been involved in the changed tax rules for artists," one Government source told The Irish Times.
A Labour spokesman said the move was disappointing.
"U2 benefited from a zero tax regime for the past 20 years when we had working families paying penal rates of tax.
"Even under the new arrangements they would still be paying a smaller percentage of their income in tax than most PAYE taxpayers," he said.
A Fine Gael spokesman said the decision appeared to be based on a cold, hard business assessment rather than any other considerations.
The U2 move has come as a response to the cap of € 250,000 on the tax-free incomes allowed to artists which was introduced in the last budget by the Minister for Finance, Brian Cowen.
"We cannot stand over a situation in which some high-earning tax residents, through the use of incentive reliefs, can reduce their taxable income to nil," Mr Cowen told the Dáil in his budget speech.
"This measure will help eliminate the phenomenon of tax-free millionaires and increase the effective rate of tax on those with high income towards a minimum of 20 per cent," Mr Cowen added.
There have been a number of reports in recent days that in response to the budget changes U2 have moved their music publishing business, into which their tax-free royalties were paid, out of Ireland.
They are reported to have relocated the payment of their worldwide royalties to the Netherlands, where they have been able to avail of a tax rate close to zero on their royalty earnings.
A spokeswoman for U2 last night declined to comment on their tax affairs.
It is understood, however, that the band will remain resident in Ireland and their business will continue to be conducted from this country, is spite of their changed tax status.
The Department of Finance and the Department of Arts, Sport and Tourism also declined to comment saying it was not the practice to comment on the tax affairs of individuals.
The Labour Party spokeswoman on Finance, Joan Burton, told The Irish Times that she was intrigued by the reports that U2 had moved part of their business to the Netherlands.
"If this is true, I am a bit surprised. Having listened to Bono on the necessity for the Irish Government to give more money to Ireland Aid, of which I approve, I am surprised that U2 are not prepared to contribute to the Exchequer on a fair basis along with the bulk of Irish taxpayers," she said.
Ms Burton pointed out that under the changes brought in by Mr Cowen, an individual artist would pay no tax on the first €250,000 of income and very little on the next €250,000.
"Considering that U2 pay the standard 12.5 per cent on their corporate earnings and, like other rich people, have had the option of availing of a whole series of tax reliefs on property investments, it is a bit surprising that they are taking this approach.
"I share Bono's desire to see more resources devoted to Ireland Aid but it is more difficult to make a case for it if everyone is not willing to be part of the social contract that stipulates that everybody should pay their fair share in what is a low tax country," said Ms Burton.
