Comment: Tax is often confusing. Our elected lawmakers typically strive to make tax law as understandable as possible to the citizen.

They should also make sure to explain clearly the basis for our taxation policies. Recent comments, however, can only have caused confusion about our taxation policies. In particular, the PAYE taxpayer has been encouraged to "get angry" on the basis of two pieces of information obtained from the Revenue Commissioners which have been linked. But do they give the full picture?

Last week PAYE taxpayers were exhorted to get angry over wealthy people who were "evading their fair share of the tax burden" by availing of incentives that cost the Exchequer €8.4 billion. It is an alarming and headline-grabbing figure. But what is the reality behind it?

Twenty-one per cent of this amount (€1.7 billion) relates to tax incentives to promote investment in employee pension schemes. Fourteen per cent (€1.1 billion) relates to the exemption from capital gains tax on the disposal by the citizen of the family home. Eight per cent (€637 million) relates to tax exemptions for children's benefit and stamp duty on the purchase of new homes.

The average PAYE taxpayer would be exceptionally angry if they thought that they would get no tax recognition for funding their pension, that the Government would take away 20 per cent of the gain on disposal of their home and simultaneously impose stamp duty on the purchase of their new home, while taxing their children's benefit. These reliefs represent 43 per cent of the €8.4 billion that the PAYE taxpayer has been exhorted to get angry about.

The Revenue Commissioners have informed the Oireachtas committee on Finance and the Public Service that only 2 per cent (less than €200 million) of the €8.4 billion is made up of property-based incentives availed of by the better off in our society. Attempts to link the full €8.4 billion figure to these incentives are unhelpful to the overall debate on our taxation policy.

PAYE taxpayers are also supposed to get angry about the 242 individuals earning €100,000 in 2001 who allegedly did not make a fair financial contribution to the State. This is on the basis that they paid no income tax. It has been suggested that the reason for this is because they sheltered all their income with tax incentives.

Revenue has since confirmed there may be other reasons no income tax was paid by some of these individuals such as the carrying forward of large trading losses. But let's assume for the sake of argument that the original assertion is correct - it has led to cries that something must be done in the Finance Bill to stamp this out.

In fact, something was done in the 1998 Finance Act. The then Minister for Finance, Mr Charlie McCreevy, provided that from December 1997, investors in property incentives would be subject to an overall limit of €31,750 on the amount of tax shelter they could use against their total income. It is difficult to understand why this measure has not been given more prominence.

Should it be the case that taxpayers today are still able to shelter total income exceeding this amount, the only possible reason is that they made their investments prior to December 1997 and therefore this issue will disappear over the coming few years.

Should PAYE taxpayers still get angry about these incentives? Have any of them benefited from the fruits of these incentives? Perhaps the following people might not be so angry:

Those whose children now benefit from excellent facilities and accommodation in our third-level colleges

Those who enjoy well-paid employment in our tourism, IT, general manufacturing and financial services industries

Those who live and work in our regenerated inner cities

Those who benefit from excellent hotel accommodation throughout Ireland

Principals of primary schools and secretaries of GAA clubs who, in seeking to raise funds to improve their facilities, can now offer tax relief for those who support their endeavours.

What about the non-property based incentives that typically have come in for a hammering such as BES and Film Relief Investments? The most recent figures provided by Revenue on these reliefs show a total cost to the Exchequer of €47 million. This is less than the €54 million cost to the Exchequerarising from expenses allowed to PAYE workers.

It has been suggested that the Revenue is currently powerless to act against abuses of tax incentives and that they should be compiling far more information in order to act. However, since 1989 the Revenue Commissioners have the power to attack schemes where they feel the sole purpose of the scheme is to get a tax advantage and there is no commercial reality. If a taxpayer has availed of a tax incentive two things are certain: they have made an investment in the Irish economy; and they have provided details to the Revenue Commissioners of the amount of their investment. In other words these taxpayers are on Revenue's radar screen. Surely recent events have underlined the fact that Revenue's attentions should be primarily focused on those who are not currently on their radar screen.

Irish business is groaning under the weight of various regulatory and compliance reporting requirements with more on the way. Our lawmakers should think carefully before imposing further tax reporting requirements on Irish business. They should in particular consider the cost to Irish business of complying with additional reporting requirements and the possible impact it might have on the desired objectives of our taxation policy. It would be unfair to Irish business to expect them to provide further information on the whole area of tax reliefs and incentives without a commitment by our policy makers that this information is not used in order to confuse and that no dramatic decisions would be taken without consultation and research with all stakeholders in the Irish economy.

Successive Irish Governments of all political hues have used our tax code strategically to promote the economy in key areas. It is healthy that an open and frank debate should take place on the thrust of our taxation policy. However, the manner in which this debate has been conducted to date may jeopardise great work that has been done by successive Governments. In particular, there is a real concern that those who shout loudest in the debate could seriously confuse our stakeholders domestically and internationally, to the detriment of our economy.

Mark Redmond is chief executive of the Irish Taxation Institute