Sports Calendar

Reputable independent consultants have calculated that property reliefs may have cost the state €2 billion in foregone revenue. They also resulted in unnecessary construction in unsuitable locations, solely so rich people could claim tax relief. And they contributed to rampant inflation in property prices.

There are incentives other than property. It’s estimated the exchequer lost more than €1 billion because of one of McCreevy’s most spectacular schemes to featherbed the nests of the wealthy. More than 6,200 people have taken advantage of “approved retirement funds” since 2000. These allow company owner/managers to divert money that might otherwise be paid in dividends — and taxed at 42% — into tax-free pensions. A couple of wealthy investors are understood to have put an extraordinary €100m into such funds. They will be able to take a quarter of the lump sum tax-free on retirement, and take a tax-free income from the remainder. McCreevy’s successor, Brian Cowen, has changed this arrangement, placing on it a still-generous limit of €5m.

All of this means that tax revenues have to be gathered elsewhere. Which explains why McCreevy in his final years as minister for finance failed to index-link movements in tax credits and tax bands for PAYE workers. He also hiked indirect taxes, such as Vat, which tend to act disproportionately against those on lower incomes.

Cowen is addressing some of these issues. Last year I made a Prime Time Investigates documentary for RTE on tax avoidance, and within days the government announced a review. It confirmed that many shelters were past their economic usefulness and were costing the state an unnecessary fortune. Last Monday, Cowen confirmed the date for the termination of a range of them.

But many remain, with tax reliefs to investors in the construction of private hospitals the most notable. Not only does this scheme cost the state money, it copper-fastens an unproven method of health funding.

Notably, too, nothing has been proposed to force tax exiles, or non-residents as they insist on being called, to pay more. Many of those who feature near the top of The Sunday Times Rich List each year limit the number of days they stay here, despite owning vast assets in Ireland. Often they own more than one mansion or estate, but pay tax only on Irish-sourced income. American citizens, by contrast, pay tax in America on their worldwide income, irrespective of where they live.

The loss in tax revenue is not known, because it cannot be calculated. Conceivably it runs to hundreds of millions of euro each year. Following my Prime Time Investigates programme, the taoiseach announced that a review of the non-residency rules would be added to the continuing review of the 23 “tax incentive” schemes in operation. Nothing has been heard of this since. I’m not holding my breath, given the wealth and influence of the exiles.

The Taxation Institute wants a commission to review the system, and to propose changes. Well, here’s a suggestion it could look at. Why not introduce a flat tax rate, with income tax, CGT, and other taxes all set at the same rate for every citizen of the state, with no allowances of any kind?

The argument against this is equity: why should the rich pay at the same rate as everyone else? Well, because they are not paying at the same rate as everyone else at present, they’re paying less. If people want to protect the poor, then declare that all income at or below the minimum wage is tax exempt for everyone, and then tax all other income at a level of, say, 25%.

At present it is middle-income earners who pay an unfair proportion. The complications in the system work against them, and in favour of those with higher disposable income. A flat rate would be simple. Everyone would be required merely to declare their income and get on with spending what’s left after tax. All that would be needed is a calculation of the rate required to give the state the revenue it requires.

That would create an enormous row, of course. But after last week’s revelations about how little tax the super-rich are paying, it’s a row that would be well worth having.

Times Recommends

• A doctor, a daughter and a man called Johnny
• Mona Lisa's smile may have belied ill health
• ‘Parasite economy’ lies behind Greek tragedy