I propose to take Questions Nos. 97 and 99 together.
The application of the 10 per cent rate of corporation tax to mushroom cultivation had its origins in the fact that mushroom cultivation qualified for export sales relief (ESR). ESR terminated for new companies in 1980 and was replaced by the 10 per cent rate of corporation tax. When legislation to bring mushroom cultivation within the scope of the 10 per cent scheme was proposed in 1981, the approval of the EEC was sought under the competition provisions of the EEC Treaty. At the time, the European Commission indicated that they did not have any comment to make but reserved the right to examine the measure in the future. As part of an ongoing review of aid schemes under Article 93 (1) of the Treaty the Commission opened an investigation into the application of the 10 per cent rate of corporation tax to mushroom cultivation in early 1991 and the Government has been in contact with the Commission on the matter since that time. The Commission concluded its investigation early this year and found the application of the 10 per cent rate to mushroom cultivation to be incompatible with the common market and, as a consequence, called upon Ireland to remove mushroom cultivation from the 10 per cent scheme. A formal procedure on this matter, under Article 93 (2) of the EEC Treaty, has already commenced.
In the light of the Commission's findings in this matter, and the opening of the formal procedure, it will be necessary to include appropriate measures to meet the Commission's objections to this measure in the forthcoming Finance Bill.
