The increase in the proportion of the State's highest earners paying tax at an effective rate of over 15 per cent proves that measures such as the capping of capital allowances are having an effect, according to the Revenue Commissioners.
The Revenue comments came yesterday in a study of the effective tax rates paid by high earners in 2001, compared to the 1999/2000 tax year.
"Between 1999/2000 the number of high-earning taxpayers with an effective tax rate of less than 15 per cent decreased by 3.75 percentage points," the report says, "whilst those with an effective tax rate between 15 per cent and 29 per cent increased by 3.25 percentage points." It says this improvement came about despite the reduction of 4 percentage points in the standard and top tax rates over the period.
The study shows that of the State's top 400 earners, 119 pay tax at 40 - 45 per cent, while a further 110 pay tax at 35 - 40 per cent. However, 115 pay tax at an effective rate of under 30 per cent, with 35 paying at less than 5 per cent.
The Revenue Commissioners will not release the incomes earned by these people. However, information given in reply to a Dáil question from Labour's finance spokeswoman, Joan Burton, last October gives some idea of the income levels involved.
That reply revealed that 41 people earning over €500,000 paid no tax in 2001. Yesterday's report shows that high earners paying no tax represented just 7.5 per cent of the total. This suggests that all 400 people surveyed for this study earned comfortably over €500,000 each.
"The study also sets out how the Government intends to tackle the problem - from now on they will refuse to release the information. In a section of the study entitled 'Proposed new Methodology going forward', it is clear that the category of 'zero per cent effective tax rate' is to be abolished in future studies," Ms Burton said.
This means it will no longer be possible to see how many high earners end up paying no tax.
In addition, said Ms Burton, from now on anyone who pays DIRT tax on any deposit interest will not be counted as having a zero per cent effective tax rate.