Irish Finance Minister Brian Cowen told lawmakers Wednesday he will restrict tax loopholes that have created a "phenomenon of tax-free millionaires," including some of the country's best-known artists.
Cowen said that as of Jan. 1, 2007, those earning more than Ђ250,000 (US$290,000) annually would no longer be able to take unrestricted advantage of tax shelters, most popularly investments in hotels and rental property. Such programs were launched in the mid-1990s to promote development in run-down parts of Dublin and other cities.
Unveiling his 2006 budget, Cowen proposed similar restrictions for the thousands of artists, including globally popular musicians and authors, who since 1969 have been tax-resident in Ireland partly to avail themselves of the country's unique tax-free status for income from creative arts including professional royalties for worldwide sales of books and CDs.
He said creative artists who earned less than Ђ250,000 annually would continue to enjoy tax-free status on income. "The vast majority of people are currently under that bracket," he said.
And Cowen also announced that Ireland in 2007 would drop its controversial tax-free break for horsebreeders' profits on stud fees, another perk unique to Ireland that since 1969 has helped transform the country into a world leader in horseracing and breeding.
Many of the world's top horsebreeders owning about 400 stallions are based in Ireland, which produces more than 10,000 thoroughbred foals a year, the most in Europe. The top-earning stallion, Sadler's Wells at John Magnier's Coolmore Stud in County Tipperary, earns his billionaire owner a tax-free Ђ250,000 (US$290,000) per successfully impregnated broodmare.
Cowen's moves sought to stifle an issue that has caused public uproar in recent years: the ability of many of Ireland's wealthiest and craftiest investors to pay little or no income tax. In 2001, the most recent year that figures were available, 11 residents earning more than Ђ1 million (US$1.2 million) didn't pay a cent of income tax.
Cowen didn't mention any particular writers or performers by name, but among those who benefit from the existing tax break are Bono and other members of U2. They annually appear on the list of Ireland's top 10 wealthiest individuals and have built a portfolio of Dublin properties.
Also resident in Ireland are several Booker Prize-winning authors and a daughter of Ireland's prime minister, Cecilia Ahern, who paid no tax on a reported US$1 million (Ђ800,000) publisher's advance for her romance novels.
But opposition leaders accused Cowen of closing one set of long-exploited loopholes, only to open more. They highlighted his government's new plans to allow investors to write off investments in privately funded hospitals.
Cowen offered forecasts that Ireland's economy Europe's most buoyant over the past decade would grow by 4.5 percent to 5 percent next year. Unemployment, he said, was expected to stay at its current European Union-low rate of 4.3 percent, while the number of jobs in this country of 4 million would grow by 60,000. He said inflation would probably rise to around 2.7 percent, and the government would increase its spending 9.9 percent to Ђ50.6 billion (US$59.2 billion), reported AP. P.T.