(Limerick East): I am not discussing section 23 of this Finance Bill which you a Cheann Comhairle rightly pointed out has already been dealt with. I was developing the point that during the previous duration of section 23 between 500 and 600 apartments were built. I understand that about half of those were built in the Dublin 4 area. That does not seem to be the area where there are the greatest number of homeless people or where there are the least numbers of undeveloped or uncomfortable dwelling houses. From past experience, I do not think it is arguable that section 23, now section 24, is being introduced to provide a boost to the stock of dwellings. Obviously it is not being brought in to ease the plight of the homeless or to provide better houses for those who are inadequately housed. It is being brought in as a measure to boost an ailing building industry. The building industry is on its uppers. Many of the main practitioners of the building industry are no longer in the country. The contractors are in the south-east of England and in various far foreign fields from Dunkirk to Belgrade and beyond the Persian Gulf in Bahrain and Kuwait and various places like that.
We must measure the re-introduction of this section to stimulate the building industry against the record of the Minister's Government since they came into officevis-á-vis the building industry. First there have been constant press reports that prior to the election a commitment was made to the building industry that a sum of £200 million of capital expenditure would be injected into that industry when the Minister's party returned to office. Second, there have been constant and continuing reports in the media that the 10 per cent VAT rate which applies to the building industry would be reduced to 5 per cent. These reports have never been denied by the Minister or his party or the Taoiseach as being inaccurate. Not only was there not an injection of capital funds along the lines promised, not only was there no reduction in the VAT rates applying to the building industry, but the exact opposite was done. In the Book of Estimates last autumn the capital budget was devastated; it was cut down to the point where, in effect, only ongoing contractual obligations were maintained. Are we now seriously to accept that the re-introduction of section 23, now 24, is going to act as a counter-stimulous to all the negative stimuli that have been the result of Government decisions over the last 12 months?
Another question also arises, and it is this: when section 23 was introduced originally in 1981 it was one of the few tax avoidance schemes readily available to the ordinary taxpayer on high marginal rates. But since then there is a multiplicity of them.
We were talking this morning about designated areas in our cities; they were to be Dublin, Cork, Galway, Waterford and Limerick. Now, as a result of the lobbying of some of the Minister's party, it is to be extended right across the country, and now the inner area of any larger town is to benefit from a whole package of incentives which would make advocates of section 23 blush.
As well as that we have the business expansion scheme. The business expansion scheme was put in the first instance so that people would use a tax avoidance scheme to invest in manufacturing industry and as a result risk a certain amount of income. Now that has been extended as well. There is a further extension of it here in the first chapter of this Finance Bill. It was extended last year to the tourist industry and in extending it to the tourist industry it is very hard, as the Minister knows, to put the ring fence around that. I have had examples brought to my attention of people acquiring holiday homes for sums of £7,000 and £8,000 net because the business expansion scheme was to take up over 58 per cent of it.
I am not, for the moment, opposing the extension of the business expansion scheme. I am not opposing the package of incentives in the cities or in the towns. What I wonder is where is the market now for a further tax avoidance scheme when there are so many available right around the country? We have financial institutions and financial organisations actively packaging taxpayers up to the level of £25,000 apiece and directing the composite amounts towards investment in manufacturing industry and tourism and in the particular areas to which it is now extended in this Act.
The question I am raising is, in the re-introduction of section 23 and its associated sections 24, 25 and 26, merely cosmetic? Is it simply providing the Minister and the Government with an alibi when they meet representatives of the building industry so that they will be able to say they could not, due to adverse financial circumstances, fulfil the promises made prior to the election but have brought back section 23 and they can go off and build apartments all over the city and it will be great?
I am not so sure if it will work this time because there are too many other tax avoidance outlets. Let us call things by their proper names. There are too many other tax avoidance outlets directed in other areas where the capital gains are more and the residual risk is probably less. Even if it works it will not be of benefit to everybody in the building industry because there are people who, in the absence of section 23, constructed blocks of apartments or small houses and the effect of now reintroducing section 23 is to make it impossible for people who have either constructed or who are in the process of constructing apartments to rent them if they cannot benefit from section 23. There are specific examples of buildings now which are, in effect, being sterilised because the rent will not be tax deductible against the acquisition cost. I do not know whether the Minister is aware of this or whether he has any plans to deal with it, but I can see a limited number of apartment blocks and houses that have been constructed for rental purposes remaining idle into the foreseeable future because there is no provision under these sections. I am not opposing it, but I believe in calling things by their right names and I believe in evaluating the merits of the sections. I do not think the reintroduction of section 23 in its widest form, as section 24 here, or the further incentives for the building industry in sections 25 and 26, will work on this occasion. There are too many other gaps now available to people under the best accountancy advice in the town and I do not think they will go through this particular gap.