Minister defends tax relief schemes

Mr Cowen, who ordered the review last year, said the schemes had been brought in by successive Governments for good reasons.

“There was a time when there was 18% unemployment in this economy, there was a time when the construction industry was employing a third of what they’re employing at the moment. There was a time we didn’t have the capital available because of our public finances in order to do any of these things,” he said.

The review showed one individual paid €25m into a pension fund tax-free, prompting Mr Cowen to introduce a cap of €5m on tax-free payments to pension funds.

And it also noted that the special exemption incentive for artists living in Ireland took almost €24m out of Government coffers in 2002.

Mr Cowen said some tax relief schemes had made a very good contribution while others had made a less good contribution.

“But I would emphasise that my predecessors of all political persuasions have used this approach in an attempt to deal with particular issues where economic activity hasn’t been uniform across the economy or across the geography of the country,” he said.

Although many of the tax relief schemes were discontinued in Mr Cowen’s Budget, he refused to rule out introducing more such schemes in the future.

“We shouldn’t close off in principle the idea of tax relief schemes if they’re required, but I agree there should be cost benefit analysis done, and that it would be limited to time three or five years or whatever,” he told RTE radio.

Nursing homes, student accommodation, hotels, private hospitals and childcare are just some of the more lucrative property-based initiatives being abused by the wealthiest in society.

The review stated: “There is no doubt that the incentives have been a key mechanism for high income earners to reduce their tax liabilities.”