The Government has rejected a proposal to grant tax relief on corporate donations to charities, despite agreement in principle by most deputies who spoke in a debate on the issue. The Minister for Finance, Mr McCreevy, said, however, that he would give consideration to a pre-Budget submission by the Charities Tax Reform Group, which is looking for tax relief on corporate donations.

Mr Michael Noonan (FG, Limerick East), who proposed the motion, said he heard no voice raised in opposition to the principle of extending tax relief to corporate donations to charities. Ireland is "out of step" with its European neighbours, all of whom have tax relief measures in place for charitable donations. He said that if TDs were allowed to exercise their opinion freely, the Minister for Finance and the Minister of State for Finance, Mr Martin Cullen, would be well advised to adopt the proposal.

The House, however, voted by 72 votes to 51 to accept a Government amendment which recognised "the considerable resources and exemptions from tax already available to charitable bodies".

Mr Cullen said the main difficulty with the proposal was the current lack of any form of registration or supervision of the large number of active charities. "Governments have been aware for some time that the current situation in relation to charities is unsatisfactory," he said.

Each year the Department of Finance "receives a large number of requests for tax relief from people and organisations which, in themselves, have significant merit. All of these requests have to be considered in the context of the available resources and competing demands for those resources".

Mr Noonan said that when in opposition, Mr McCreevy had supported the extension of tax relief, which was raised again in a pre-Budget submission by the Irish Charities Tax Reform Group. He said the Ministers should not accept the advice of civil servants on this issue to oppose the extension of tax relief.

It was their job to resist "raids on the Exchequer" but the same arguments were used when the tax relief on personal donations to Third World charities was granted. The State believed that the cost to the Exchequer would be "unquantifiable" and would be a "huge hit".

However, with the granting of tax relief on personal donations to Third World charities, "the sky didn't fall in" and the loss to the Exchequer was miniscule.

Mr Noonan added that the Opposition did not want the tax relief to "go all over the place" or to be "a scam". His party would agree to serious and valid measures to "ringfence" it.

Ms Marian McGennis (FF, Dublin Central) expressed concern that, in the past, funding appeared to have gone to charities with the best public relations machine rather than to those with the best cause.

Mr Eamon Gilmore (DL, Dun Laoghaire) believed it was "hardly an exaggeration" to say Irish society would collapse without the help provided by charities and voluntary groups.