'Significant people' avail of tax relief

Individuals who avail of the non-residency tax incentives are "significant Irish people" who generate a good deal of wealth in the State, Taoiseach Bertie Ahern told the Dáil.

Rejecting claims they were "chancers and dodgers", Mr Ahern said that a large number of people were in the category of non-residents who "come here and pay tax, who spend quite a lot of money and have many businesses in this country". He said the tax-free status for those non-resident for 183 days a year would be reviewed but he said they "could go elsewhere or stay elsewhere and it is better to have them in the country over a longer period".

He insisted that even if they were non-resident, "Irish people are liable to income tax on directorships, rental procedures and in other areas. It is not simply a black and white issue." Mr Ahern said "the reason for the operation of the clause is that it was agreed it was better to have these people spending as many days as possible in the State".

"That means they have directorships, investments and property here. They spend money while they are here, probably more than the rest of us would in the entire year."

Labour leader Pat Rabbitte, who raised the issue following RTÉ's Prime Time programme, said the Taoiseach as Minister for Finance in 1994 was the "author" of the tax amendment, and that when he introduced it he referred to the difficulties of FÁS and ESB staff who had concerns when they went abroad for short-term contracts.

Mr Rabbitte said the amendment had nothing to do with anyone employed by FÁS or ESB and that was misleading. In the 10 years since, he asked, "has the government made any plans to restrict the extraordinary latitude we give, under the tax code, to very wealthy people to disport themselves in this country as and when they choose without being subject to any enforcement, monitoring or supervision that we can see, but benefiting at the same time by not paying any tax in this jurisdiction?"

Mr Ahern agreed that the beneficiaries "are generally wealthy people, not FÁS workers" but he said Mr Rabbitte had the opportunity "in the Finance Acts of 1994, 1995 and 1996" to change the tax code.