Vol. 418 No. 6
81 Mr. Spring asked the Minister for Finance if he will outline his plans for the capital gain from rezoned land and land benefiting from public investment; if he proposes to tax such capital gains and to have the proceeds ploughed back to developing the city's infrastructure; and if he will make a statement on the matter.
The capital gains arising from the development of rezoned land and land benefiting from public investment are subject to normal capital gains tax. In my budget last January, I introduced a single capital gains tax rate of 40 per cent which applies to all capital gains with effect from 6 April 1992. This new single rate is part of the overall Government drive to simplify and reform the tax code, and make it more equitable. Indeed, a single rate of capital gains tax was one of the recommendations of the Commission on Taxation.
The existing method of valuing development land for capital gains tax purposes will remain in place. This method values development land according to its current use rather than its development potential. This means that those who speculate in land which has increased in value as a result of rezoning or public investment will continue to incur a greater capital gains tax liability than investors in other assets.
It is a general feature of our taxation system that revenues from particular sources are not ear-marked for specific objects of expenditure. Revenue is provided to the Exchequer as a whole, to fund expenditures mandated by the Oireachtas. However, my colleague, the Minister for the Environment, informs me that, under the Local Government (Planning and Development) Act, 1963, a planning authority is empowered to attach conditions to planning permissions requiring developers to contribute towards expenditure incurred or to be incurred by the authority on works which will facilitate the proposed development. The decision to attach such conditions and the scale of the contributions required are matters for the planning authority concerned, or for Bord Pleanála on appeal.
