Singer Bono has claimed that he and U2 pay "millions in tax" to the Irish state - despite a widespread belief that the band pay nothing under the Artists Tax Exemption scheme introduced by Charlie Haughey.

"You know, we pay a lot of tax by the way, a lot of tax, enormous, millions of tax," Bono told Dave Fanning in an exclusive interview in today's Sunday Independent.

The Minister for Finance Brian Cowan is currently reviewing all tax exemption schemes available to wealthy Irish residents after it was dramatically revealed that 41 businessmen paid no tax at all on declared incomes of over €500,000 a year.

Exemptions on stallion fees, which allow multimillionaires such as John Magnier to pay no tax on vast earnings, have come in for sustained criticism.

Wealthy lawyers and businessmen are also allowed to write off tax on investments in hotels, nursing homes,private clinics and urban renewal schemes.

Other schemes allow artists, writers and musicians to live in Ireland without paying tax on music royalties.

But Bono, who was instrumental in the cancellation of African debt after personally intervening in negotiations with US President George Bush and British Prime Minister Tony Blair, said that while the tax exemption "encouraged us to stay in Ireland", the band would not leave the country if it was abolished.

Millionaire rock star residents such as U2, The Corrs, Enya and others can avail of a section of the Taxes Consolidation Act which allows them tax-free earnings from musical "composition". But as Irish residents, they have to pay tax on millions earned from concert tours and CD sales.

"People think that artists in Ireland are tax free. Our publishing, which is about one third of our income, we have tax breaks on, and that's great and that's encouraged us to stay in Ireland and if that changes, it's not going to affect anything for U2 - but young U2s might have to leave and that would be a shame," said Bono.

The singer and U2 were honoured by the music industry with a lifetime achievement award at the Nordoff-Robbins Silver Clef Awards in London on Friday night.

And he urged the nation to get behind the forthcoming Live 8 concerts for the cause of debt relief. "I don't think it's the pop stars or the musicians that the politicians are afraid of: it's the audience. They are young people and they can change things," he said.

Speaking about the Artists Exemption introduced 30 years ago by Charles Haughey when he was Minister for Finance, Bono said the break made U2 "work harder" and "sharpened us". The band are in their home town next weekend for three sell-out concerts in Croke Park.

U2 have never been publicly identified with the tax exemption because they availed of it before the introduction of the Freedom of Information Act and like others in that category, their identity has been kept secret by the Revenue Commissioners.

But under a recent ruling it was disclosed that some of the musicians who avail of the tax exemption include Christy Dignam of Aslan, Brian Kennedy, David Kitt, Samantha Mumba, Sinead O'Connor, Liam O'Flynn, Cait O'Riordain and Roger Whittaker.

Bono and the other members of U2 are directors of a series of companies in Ireland and abroad. One of them, U2 Limited, which filed returns for 2003 showed "a shareholders deficit" of €11m. However, there are various complicated financial arrangements involving the highly-profitable rock band which generates millions each year from performances, CDs, publishing and other spin-offs.

According to yesterday's Guardian newspaper, the Irish government is consulting "in secret on whether to scrap the scheme".

However, it is unlikely that the writers and artists' tax exemption will go, even if other tax reliefs like the exemption on stallion fees are modified or abandoned.

Among the writers who have come to Ireland to avail of the tax exemption scheme is Irvine Welsh, the millionaire author of Trainspotting, which was made into a highly successful film.

"Anybody would agree with a scheme where they don't have to pay tax," he told the newspaper. "I didn't move here for tax reasons, but obviously as a writer, I would take advantage of it. I know the scheme is there to keep big entertainers like U2 based in the country instead of losing them to LA."

But thriller writer Freddie Forsyth, who is largely credited with leading the influx of writers to avail of the Haughey scheme, said the exemption should not be scrapped. He said Irish writers no longer needed to flee to Bohemian London to escape the repressions of the Irish church and state.

Forsyth, author of The Day of the Jackal, The Odessa File and The Fourth Protocol, also said that "being a complete fool, I didn't actually write a book while I was in Ireland, so it only saved me a few quid."