Irish Government's Missing Tax Millions Found

by Carla Johnson, Investors Offshore

17 October 2002

Reports in the Irish media earlier this week revealed that an explanation has been found for the drop in income tax receipts which had been puzzling experts for some time.

It emerged on Tuesday that Finance Minister, Charlie McCreevy has been funding his Special Saving and Investment Account (SSIA) scheme (designed to encourage the Irish public back into the habit of saving by proving a cash incentive whereby the government adds one euro to every four saved over a five year period) straight from the tax take, significantly reducing the amount of money forwarded to the Department of Finance.

According to a report in the Irish Independent on Wednesday: 'The income tax shortfall - which is running at 2.3 billion euros behind target - had been puzzling economists, since it suggested the economy was more depressed than indicated by other pointers such as the employment figures. But it has now emerged that the method used to service Mr McCreevy's SSIAs gave a false impression of the income tax take.'

However, despite the fact that the scheme has proved much more expensive than was previously thought - initial Department of Finance estimates suggested that the cost of the scheme would work out at around 100 million euros per full year, whereas in actual fact, it has grown to around 540 million euros per year - and despite the fact that this latest revelation is likely to increase scrutiny of Mr McCreevy's handling of the economy, the government is unlikely to scrap the scheme for a while yet, no doubt mindful of the huge public backlash which would occur if it did.

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