Tax breaks on seaside holiday homes which allow investors to write off the cost of the properties, have led to Exchequer tax losses of €315 million, it has emerged, writes Mark Hennessy, Political Correspondent
The Seaside Resort Scheme, which was begun by the rainbow government in 1996 and extended subsequently by Fianna Fáil and the Progressive Democrats, has been widely criticised for spurring ill-planned development.
Revenue Commissioners figures produced last week show that investors cut their tax bills by €46 million by investing in properties in Youghal, Co Cork, by €36 million in Bundoran, Co Donegal, and by €25 million in Kilkee, Co Clare.
Investors in Salthill, Co Galway, properties saved €24 million in taxes, while those in Courtown, Co Wexford, topped the list with €52 million in tax savings.
More than 5,000 investment-inspired homes were built: 400 in Kilkee, 890 in Courtown, 780 in Youghal and 652 in Bundoran.
The scheme was originally designed to increase the number of rental properties in seaside resorts, and investors must let the properties for 10 years and are forbidden from using them themselves during this period.
The seaside resorts tax breaks were sharply criticised by the Department of Arts, Sport and Tourism in 2001, which said the scheme would prove of questionable value for local communities.
Kilkee beach lost its Blue Flag status after the tax-inspired houses were built, amid allegations that the town had inadequate sewerage to cope with the extra numbers of visitors. Green Party TD Dan Boyle, who was refused the full list of names of qualifying companies and individuals by Minister for Finance Brian Cowen, said: "We are talking about enormous sums of money and we have not had a great deal for it."
He demanded an investigation by the Comptroller and Auditor General, John Purcell.
"The figures in lost taxes are unacceptably high and need analysis. There is a real information deficit here," Mr Boyle said.
The State would have received better value if it had invested €315 million in each of the 15 towns targeted by the scheme.
The existence of such tax reliefs will be highlighted today by Combat Poverty when the organisation appears before the Oireachtas Committee on Finance and the Public Service.
"Tax reliefs play a considerable part in reducing the fairness of the taxation system which is the main mechanism to ensure a more equal society," the agency says in a submission.