Republican News · Thursday 28 November 2002

€8.5 billion taxes lost to exchequer

NESC report a damning indictment on government record

BY ROBBIE MacGABHANN

In the tax year 1999 to 2000, tax revenue in the 26 Counties tipped €30 billion, an impressive sum. However total tax revenue could have been approaching €40 billion if it were not for the €8.5 billion written off over the year in tax reliefs and allowances.

The latest report from the National Economic and Social Council (NESC) contains these figures and much more disturbing findings on the real state of the Irish economy. But first the tax write offs.

Stuck in the appendix at the very last page of the NESC report is the estimated full year cost of the 35 plus maze of tax reliefs that have been introduced by different Dublin governments over previous budgets and finance acts.

Most of the relief offers lucrative tax breaks to the wealthy elite in Irish society. The Revenue Commissioners report also released last week shows just how, for example, that over 22,000 people in the 26 Counties earn more than €100,000 annually and it is these earners who are escaping tax payments through Dublin government avoidance schemes.

One of the biggest write-offs was the €1.629 billion lost in capital allowances. This is a write-off initially created to help businesses who invest in plant and equipment but over the years has been extended to include airports, hotels, nursing homes, private hospitals and convalescent facilities, student accommodation, third level colleges and not forgetting maintenance and repair of "significant buildings and gardens", otherwise known as the country mansion or the Georgian townhouse.

It is one of the injustices of the tax system that you can get tax relief for building a childcare facility but not for the substantial costs borne by many workers who have to pay childcare fees.

Other property related schemes such as the resort allowance scheme or the double taxation relief cost the state hundreds of million of pounds. Interestingly, figures for stallion stud fees were not available.

other important comparison from the figures was comparing the amount of money written off in allowances for pension contributions. There are in Ireland substantially more employees than employers, yet employers' pensions cost the exchequer €645 million while employee pension allowances cost €456 million.

The lost tax revenue was only part of the 152-page report and the NESC has "expressed its concern at the highly complex system of tax reliefs and the lack of any clear principles in the evolution of these reliefs".

The NESC report also proposes a land tax and "appropriate taxation of windfall gains that arise from general economic and social development".

The infrastructural deficit facing the 26 Counties in terms of roads, public transport, electricity, telecommunications and housing is also raised and the report calls for a re-examination of current road building plans.

The NESC itself is in its constitution required to submit its reports to government and put them before Leinster House. It should be required reading for the Dublin government, because it clearly and with complex research offers a forensic study of their failures.