The Government is to hire a team of consultants to examine a wide range of tax shelters and exemptions which may be used by wealthy people to reduce their tax liabilities, sometimes to zero, it has emerged.
On Christmas Eve the Department of Finance circulated tender documentation seeking consultants to carry out a review of "property-based tax incentive schemes" and area-based schemes such as urban renewal.
The idea of taking a fresh look at various tax shelters and exemptions was first mentioned in this year's Budget speech by the Minister for Finance, Mr Cowen.
He was responding to political criticism that certain wealthy individuals appeared to be paying no income tax at all.
Figures obtained by the Labour Party earlier this year showed that 41 people earning over €500,000 and 11 earning over €1 million paid no income tax in the 2001 tax year.
The annual cost of the major tax reliefs to the Exchequer is currently running at €8.4 billion, according to figures from the Revenue Commissioners. The €8.4 billion total compares to total tax revenue of about € 34 billion.
According to the tender documentation, the scale of the work to be undertaken by the consultants is considerable.
In relation to the "property based" tax-incentive schemes, capital allowances provided in the following areas will be investigated: hotels, holiday cottages, private hospitals, sports injury clinics, nursing homes, third-level education buildings, student accommodation, childcare facilities, park-and-ride facilities, multi-storey car parks and countryside refurbishment schemes.
The consultants will study whether the schemes have "justified their introduction", and whether they have helped to achieve certain policy objectives.
Formal cost/benefit analysis exercises will be carried out on each one, says the documentation.
The consultants will also be asked to consider what the impact might have been if restrictions had been placed on "high income individuals" availing of the reliefs.
Some of the schemes have no termination date, whereas others are due to finish on July 31st, 2006.
The consultants will be asked to suggest improvements to ongoing schemes, and examine whether there is any need for new schemes to replace those ending.
In relation to holiday homes the consultants will consider whether the scheme has improved the quantity and quality of Irish tourism accommodation.
The property-based review will be overseen by a steering committee chaired by the Department of Finance and representatives of other Departments and State agencies.
Consultants looking into "area-based" schemes will be asked to examine their "impact, operation, effectiveness and cost". The following schemes will be subject to scrutiny: urban renewal, rural renewal, town renewal and the living-over-the-shop renewal scheme.