In a submission to the Oireachtas finance committee, Mark Redmond, the chief executive of the ITI, defended the system of tax exemptions, arguing that they produced an overall benefit for the Irish economy and are needed to achieve "socio-economic benefits".

Mr Redmond pointed to the success of the Irish Financial Services Centre in Dublin as an example of how well-directed tax exemptions could benefit the national economy.

"[The IFSC] has put Ireland on the international map as a centre of excellence for financial services," he told the committee.

"It has created directly at least 14,000 high-earning jobs and, conservatively, it's estimated it contributes at least per annum EUR700 million," Mr Redmond added.

The Oireachtas finance committee is currently reviewing a range of tax concessions amid growing calls from opposition members that they are unnecessary and tend to help the wealthy avoid tax. It is also reviewing the rules governing residency for tax purposes. As things stand, persons need to spend more than 183 days in Ireland to be considered resident for tax purposes.

"There is an increased inequality and increased divergence between a number of very wealthy people and very poor people and tax is one of the key elements," argued Labour finance spokesperson Joan Burton recently.

However, Philip Brennan, president of the ITI, stated that is was wrong to believe that there is widespread abuse of tax incentives by high-income earners to eliminate their tax liabilities.

"We do not believe that this is the case," he said.

The committee heard that 5,305 taxpayers who earned over EUR200,000 paid EUR650m in 2001, more than the total tax paid by the 1.1 million lowest income earners.