A SUBSTANTIAL number of the highest income earners in Ireland are still paying no tax or paying very small percentages of their income to Revenue, the Labour Party has said.
Joan Burton, the party’s finance spokeswoman, said restrictions introduced by government in 2006 and 2007 to ensure that the Republic’s highest earners pay 20 per cent of their income in tax has had mixed results.
She was responding to an analysis of the operation of the scheme in 2008 by the Revenue Commissioners, which has been posted on the Department of Finance website.
The restrictions limited the number of tax breaks and reliefs that high-income individuals could use. Prior to 2000 many of the 400 top earners paid tax close to zero per cent.
The latest report shows that the 423 highest earners paid almost €40 million in additional taxes in 2008 because of the restrictions.
It showed that for 189 individuals who earned €500,000 or over, the average tax rate was 19.86 per cent, with none paying below 15 per cent.
However, for 234 individuals earning between €250,000 and €500,000 per annum, a total of 54 paid a tax rate of between zero per cent and 5 per cent; while a further 34 paid tax rates of less than 10 per cent.
The Department of Finance said measures introduced have significantly increased the tax take from this group, with an additional €39.68 million in tax revenue because of the restrictions.
They say that further changes in the 2010 Finance Act will further increase the tax liabilities of this group. The 423 individuals declared some €315 million in total under 53 different headings.
The biggest category was the writing-down of allowances in respect of capital expenditure on hotels and holiday camps. Some 148 people claimed €58.4 million in reliefs under this category.
Almost €40 million in relief was used by 43 individuals for dividends and distributions out of exempt patent income.
Some €20.9 million was claimed by 32 people under the artists’ exemption. None of the individuals are identified.
Ms Burton said there were still significant numbers of people with high incomes who had the capacity to reduce their marginal tax rate to below 20 per cent by various schemes.
She also said she was concerned at the long “tail-life” of some of the property tax breaks.
“These are people who invested in property-based assets and are now benefiting from very large write-downs on capital.
“It is very dead-weight tax money. It’s not doing anything for the construction industry and it is not really benefiting anybody.”
Ms Burton also said the report did not look at measures that wealthy people used to switch income to capital gains in order to reduce their total amount of income. “Our tax system continues to be peppered with loopholes for those who are very rich,” said Ms Burton.
