REVENUE RULES:MINISTERS, TOP State officials and President Mary McAleese will not suffer a tax penalty because of their move to sacrifice 10 per cent of their salaries, following a decision by the Minister for Finance, Brian Lenihan.

Under existing Revenue rules, they would have been required to pay a 2 per cent levy on the monies surrendered, even though they have given the funds back to the exchequer in response to a call from the Minister for Finance before the Budget.

The decision to give up 10 per cent of their pay cost Taoiseach Brian Cowen, who earns €285,582, nearly €600 a week, while Tánaiste Mary Coughlan, whose salary is €245,296, surrendered approximately €500 per week. The other 13 Government Ministers, who earn about €230,000, will lose more than €400 a week, while 20 Ministers of State lost about €300 a week from their €150,996 salaries.

Mr Lenihan's unheralded decision yesterday means that the sacrifice will not be compounded by the imposition of the income levy - though they will be subject to the 1 per cent health levy on their full salary, despite efforts to see whether the surrendered sum could be excluded from it.

In a clause in the Finance Bill, which was not highlighted yesterday by the Minister or his officials, he has decided that the State's top-paid earners should be able to invoke a clause in the 1997 Taxes Consolidation Act.

Following changes made after then Progressive Democrats leader Des O'Malley gave up his State pension whilst holding office, Ministers are already excluded from paying income tax on monies they do not take up.

Under the 1997 legislation, a person making "a gift of money" to the Minister for Finance is able to deduct the gift from their total income of the year and set it against income due for taxation.