TAOISEACH BRIAN Cowen said he could not comment for legal reasons on the arrangements made by businessman Gerry McCaughey to reduce his tax liability.

Mr McCaughey’s Century Homes was acquired by Kingspan for €100 million in 2005. He, and three other shareholders, were advised that they could benefit from not paying 20 per cent capital gains tax on the transaction if their spouses lived in Italy for a year.

“I am aware of the report on this matter which was aired this morning, and you will appreciate that I cannot comment on any detail on an individual’s tax affairs,’’ said Mr Cowen.

“These are matters between the individuals concerned and the Revenue Commissioners.’’

However, by way of general comment, he said that as a result of cases which had come to the attention of the Revenue Commissioners involving transfers of assets between spouses, and the use of reliefs provided under tax treaties with other countries, changes in the capital gains tax legislation were introduced in the Finance Act 2006. Those changes, said Mr Cowen, had removed the exemption of gains on transfers between spouses in such cases.

“I understand that arrangements undertaken before the Finance Act of 2006 are currently the subject of litigation, and for this reason it would inappropriate for me to comment further on them . . . only to say, obviously, that the Revenue Commissioners would continue to hold the view that requires them to pursue these matters in respect of those arrangements prior to the enactment of the 2006 Act through litigation . . . ’’

The matter was raised by Labour leader Eamon Gilmore, who referred to the “Green crony’’, Mr McCaughey. He had legally avoided paying capital gains tax by transferring the shares to his spouse. What Mr McCaughey had done was perfectly legal, said Mr Gilmore, adding: “That’s the problem.”

He asked Mr Cowen to give some assurance to the State’s taxpayers, who were likely to be hit by further tax increases in the budget, that the arrangement of tax exiles would be ended once and for all.

“I think people are scandalised that this type of arrangement can be entered into . . .that if you are well enough off in this country, and you have good enough accountants, you can manage to get around tax liabilities . . .but if you are a PAYE worker somewhere, or a business trying to keep going, you do not have any escape.’’

Mr Gilmore said Minister for the Environment John Gormley had appointed Mr McCaughey chairman of the Dublin Docklands Development Authority, describ- ing him as “one of our most successful Green entrepreneurs” and had shown leadership on issues including regulatory reform and sustainable business practices.