The Government is to carry out a major review of the State's tax incentive and exemption schemes which will reveal how many individuals and firms are availing of them, and how much it is costing the Exchequer every year.schemes and those relating to stallion stud fees
Previously the Government has not gathered information on the take-up of the schemes, despite the fact they are estimated to cost the Exchequer at least hundreds of millions every year.
The new drive to gather information will shed light on many controversial tax relief and exemption schemes, including those relating to stallion stud fees. Many of the schemes were extended by the Minister for Finance, Mr McCreevy, under the 2004 budget.
Private individuals, as well as the self-employed and big business, are to be targeted as part of the major new "information capturing" drive.
However, while 22 schemes would be assessed, there were still no plans to gather information on a further 14, according to the Department of Finance. The schemes to be assessed include 14 property-based incentives, four relating to corporate taxation and four relating to pensions.
Department Secretary General, Mr Tom Considine, yesterday told the Public Accounts Committee the information will be gathered following changes to tax return forms. Those completing the tax returns will be obliged to include information relating to any exemptions, or reliefs availed of, in the relevant tax year.
In respect of the self-employed and PAYE workers, the information will be gathered on 2004 tax returns. It means information on both, in relation to the tax reliefs and exemptions, will be available by early 2006. Similarly, information would be captured this year on how big business is using the schemes. This data is expected to be available by September 2005.
"The changes to the return of income forms will, over time, yield additional information regarding the cost of various tax reliefs, particularly in the area of capital allowances," he said.
"As well as trying to improve the availability of data on existing schemes, we are conscious of the need, in introducing new schemes, to bear in mind data capture considerations." However, he said the merits of existing incentives could not always be judged on financial considerations alone.
Mr Michael Noonan TD (FG), a member of the PAC, said he believed incentives should be used to stimulate economic growth. He welcomed the plans to track how the incentives and exemptions were being used, because he suspected individuals were abusing them in treating them as a mechanism by which to convert earnings into property without paying tax.
The Labour leader, Mr Pat Rabbitte TD, said the plans to track the schemes may simply encourage those availing of them to engage in "tax engineering" and conceal monies earned here.
