Finance Bill, 1996: Report Stage (Resumed) and Final Stages.

Debate resumed on amendment No. 15:
In page 14, line 14, after "a" where it secondly occurs to insert "son or daughter or".
—(Deputy McCreevy).

There is provision in the Bill for the allowance for security alarms to be claimed by a relative of the elderly person. From what the Minister said on Committee Stage, it appears there is not any need to insert the phrase "son or daughter" because the term "relative" in the Bill would include a son, daughter or others. On that understanding, I will not press the amendment.

On Committee Stage I raised with the Minister the question of personal alarms, including lockets worn around the neck. I queried whether the definition of an alarm system provided for in the section actually covers such a system, because the Bill states that it is "an electrical apparatus which, when activated, is designed to give notice to the effect that there is an intruder present or attempting to enter the premises in which it is installed". It seems to me that the definition is not apt to cover systems which elderly people could carry on them which can be used for other purposes, such as those which summon help in the case of illness or which can be carried outside the premises so an elderly person on a farm can go out of their home. I want the Minister to confirm that such a system, that is, a portable object for an elderly person by which they can summon aid, which has nothing to do with a system installed in the house to detect intruders, will be covered by this provision. It is important that we should have clarity on that point.

I appreciate the comments made by Deputy McCreevy confirming that the amendment in his and his colleague's name is redundant because the word "relative" embraces both son and daughter and other close relatives.

I am happy to say to Deputy Michael McDowell that in the spirit and intellectual tradition ofHumanae Vitae, which is equally concerned with human life, a broad and liberal interpretation would be made with respect to the purposes and uses for which an alarm system is purchased and applied. The definition of a personal alarm system which is designed to enhance the personal security of an individual from whatever source of danger will be liberally interpreted by the Revenue Commissioners.

We are not just talking exclusively about intruders; we are talking about securing elderly people living alone in a manner which they require. They may need assistance for an unforeseen medical problem. If the person has an alarm system to alert other people to the danger which the person is confronting, that will be suitably interpreted. That is the intention of the Revenue Commissioners. I hope it addresses the concerns which are shared by every Member of this House.

I represent a rural constituency in which many elderly people live alone and in which there have been many robberies, including some fatal attacks on elderly people. A number of people are working closely with the Irish Association for Victim Support. They are not involved in the provision of a security system but they are involved with two private companies in the provision of a telephone alert system which is not referred to anywhere as a security or alarm system. The telephone alert system enables the elderly person living alone to summon the Garda, a neighbour, a member of the family, a priest or a doctor, that is, somebody who is in a responsible position. It is not called an alarm. Knowing how tightly the Revenue Commissioners interpret words and how carefully they listen to what their Minister says and agrees to in this House, can I get agreement and an assurance from the Minister that such a system will be included?

I may not call the Minister again as we are dealing with Report Stage of the Bill.

Can he not just reply——

He may not, I am afraid.

You have——

If the Deputy would like to rewrite the Standing Orders——

No. Under Standing Orders, may I move that the matter be recommitted?

By all means, the Deputy can have the matter recommitted. The Bill is recommitted in respect of amendment No. 15. Is that agreed? Agreed.

I am sorry that I replied prior to Deputy Geoghegan-Quinn's intervention. I was not aware that she intended intervening — I should have anticipated that. I am happy to confirm that her interpretation is correct and that, subject to the normal safeguards, a system, which has elements of an alarm/alert electronic component designed to enhance the personal security of people living alone with which they can communicate their sense of distress, isolation or jeopardy from whatever source, be it medical or otherwise, will be liberally interpreted by the Revenue Commissioners.

Ultimately, the Revenue Commissioners must interpret the law as it is written and they will inform themselves on the basis of what is law and precedent, but there is room for discretion here. As a Member of this House with some experience, Deputy Geoghegan-Quinn has asked me to clarify what I mean by this section. I think I have amply clarified my interpretation to her satisfaction.

I hope there are no difficulties with the Revenue Commissioners. I do not believe the section needs to be rewritten in any way. However, if it is not satisfactory and we run into difficulties, I undertake to clarify it next year.

I thank the Minister.

I thank the Minister for what he said. I know that if any problems arise, it can be examined again. I do not anticipate any problems. Generally, in such matters, the Revenue Commissioners interpret the law in a generous fashion. Hopefully, a large number of people throughout the country will avail of this tax relief. I know there will be a certain loss to the Exchequer and the Minister for Finance always says he must always guard the public purse, but as this is one area which will be instrumental in developing social policy, I am sure there will be long-term savings to the State.

There is plenty of VAT to be paid.

Apart from everything else, I hope the Minister will be able to tell the House the number of people who availed of the scheme because it will be worthwhile.

Amendment, by leave, withdrawn.
Bill reported without amendment.

I move amendment No. 16:

In page 14, between lines 44 and 45, to insert the following:

"6. —If a claimant proves that for the year of assessment he/she is employing an individual to care for his/her dependent children, the income tax to be charged on the claimant for that year of assessment shall be reduced by an amount equal to the appropriate percentage of the payments proved to be so made."

My colleague, Deputy Michael Ahern, put forward this amendment on Committee Stage, as he did last year, in order to recognise the expense in which people working outside the home must involve themselves. I know a number of Members of this House would agree with this suggestion.

The purpose of the amendment would be to allow a tax deduction against the taxpayer's income for payments, subject to an appropriate limit, the person must make in order to be able to work outside the home. It would be of most benefit to women who usually must bear childminding expenses in order to be able to work.

Deputy Michael Ahern and I have said on previous occasions that there would be some spin-off to the Exchequer on the positive side too. It is true to say that if they had to register themselves as being an employee, for instance, who looks after children, it would probably not be worth many people's time. Many of these people are not registered as employers or employees. The reluctance in that regard would come more from employees than from employers because people employed in this activity are often regarded as adult dependants on their husbands' social welfare claim, for example.

Many employers would like to build up an insurance record for their employees. As Deputy Michael McDowell pointed out on Committee Stage with regard to his individual circumstances, he would not be prepared to take the chance. As the employment laws have been developed and people have become more litigious and aware of their rights, a large number of people who have women taking care of their children in the home and who are not registered as employers and deducting PAYE and PRSI would prefer to have the matter legitimised. They know if they do this, their employee will walk away. They are then in the dilemma of trying to decide what to do if anything happens. I am aware of cases from my own professional experience where the employee was satisfied for a long number of years to accept gross pay and remain outside the tax net. For one reason or another when they decided not to work the employer received a letter, followed by a visit from the local officer of the Department of Social Welfare, to say the person had employed Mrs. X or Mrs. Y and that it did not have an insurance contribution. This is tough luck on the employer because responsibility for registration does not rest with the employee.

This rule which applies to all organisations would be of considerable benefit to women who have to go out to work or who have decided for their own reasons to remain in their profession. Speaking on the Civil Service Regulation (Amendment) Bill, 1996, last evening we remarked on the changed circumstances from the 1950s to the 1970s regarding the marriage bar in the public service. The attitudes which prevailed then are long outdated. I know the Minister is committed to greater participation by women in the work-force. If this amendment were accepted, there would be spin-offs and a gain to the Exchequer. For those and other reasons I commend this amendment.

I support my colleague, Deputy McCreevy. This is really a women's issue because the vast majority of people who require child minders or housekeepers are women and virtually all the people who take up the employment are women, many of whom are married and find it difficult to become involved in a full-time capacity in the workplace in any other type of employment. Many of these women may not have had the opportunity, which their families now enjoy, of having an education for the work-force and to be able to take up the kind of fulfilling employment which many of their sisters may enjoy.

Deputy McCreevy is correct when he said that many of the women employees chose not to be registered and not to be part of the mainstream of the tax net. They are concerned that they will be penalised in some way and that it will not be worth their while to take up such employment. Many of these women take up this type of employment from economic necessity to pay the mortgage and various other bills. Sometimes that employment is on a three day week, on a part-time basis rather than in a full-time capacity. At a time when all of us in the House are concerned, when there is a public outcry about child care facilities, the type of care we give our children and the rightful concerns we should have in relation to the people who mind them, this would be a timely amendment to the Finance Bill. It would also encourage something we all want — a register of child minders. When one views what is happening in areas of residential child care and other aspects of child care, it is timely to provide such a register. I do not believe we will have a true register until we have a facility such as that put forward in Deputy McCreevy's amendment which I strongly support.

We had an extensive discussion on this issue on Committee Stage and I do not want to repeat at length what I said there. This is an area which requires careful thought and consideration. I listened last night to the debate on the Civil Service Regulation (Amendment) Bill proposed by the Minister of State at the Department of Finance, Deputy Avril Doyle, who said two Departments were getting créche facilities. It is great for the people in those Departments who are getting such facilities——

With planning permission.

——but other people have to provide the same facilities out of their own pocket. I presume the flint-hearted Minister for Finance will not charge anybody BIK on créche facilities being made available by their employers. If it is not a benefit in kind in the hands of some people, it is harsh to say to other people who have to provide similar facilities at their own expense that they get nothing by way of acknowledgement that one of the consequences of their having to work is that they incur an expenditure of this kind. This is something that should be taken into account.

To keep people honest and to regulate the situation, it is out of the question to expect a married woman, or a married man for that matter, to fill out P60s and to deal with the Revenue Commissioners in relation to what goes on in their own house. It is crazy. I know this because I am happily married to someone who is competent to do these things and I never have to worry about them. On one occasion I did have to worry because due to the particular circumstances I had to address my mind to a particular set of documentation and I nearly freaked. I could not work out even how to start to compute all that has been done. It is unfair to put an onus on ordinary people in their domestic existence for which other people require accountants to help them. I do not think the average person can fill out the annual documentation required by the Department of Social Welfare. Certainly, it is not made simple. I reiterate that there is a certain category of employment in and around the home which should be the subject of a simple one page document and a flat sum which can be sent off without having to calculate percentages. That should be the end of the matter and the person's position regularised. That could easily be done if there was a will to do it. Many men and women want to behave in accordance with the law.

I take the point made by Deputy McCreevy. If many people said they would obey the law, the employee would walk out the door immediately. Employers are forced into a position where they cannot legally do what they are obliged to do because of economic circumstances — Deputy Geoghegan Quinn made the point — to pay the mortgage. They cannot comply with the law and at the same time do the right thing by their family. I ask the Minister to address this issue as a matter of urgency.

Employment in the home is recognised as special from the point of view that the Unfair Dismissals Act does not apply to it. If a person sacks her child-minder she cannot be brought before an equality appeals tribunal and made to pay compensation. This is sensible in that one could not possibly have people litigating about whether they were rude or abusive to their child minder in the home. That kind of litigation would not make sense because the relationship is too close to have people going to law and forcing each other to employ each other and so on. From a tax and social insurance point of view a different regime should apply. The Government wants to encourage progressive employers to provide créches and knows there are many employees whose employers do not provide such facilities. If a créche is not regarded as a benefit in kind for a mother or father at work, it seems to follow that some relief should be given to a person who, out of their own pocket, has to put themselves in the same position as they would be if their employer was progressive enough to provide a créche.

I ask the Minister to indicate that this will be the subject of a special study in his Department to give justice to ordinary people who are trying to cope with an unfair situation. If I cannot — and I consider myself reasonably well educated — make head or tail of the documentation which is required in respect of one of those types of employment, I do not think the vast majority of people can. It is unfair in those circumstances to cast on them the onus of either going to an accountant or simply cheating to fulfil what are definitely reasonable family requirements in respect of help in the home.

I support the amendment. I am sure the Minister knows the problem is much wider and it involves defining social employment. In addressing this problem, we must deal with the complexities of our historic interpretation of employment. There are no easy answers and we must not complicate matters for employers or employees.

We are not trying to penalise women who earn a few bob minding children, as such income makes an enormous difference to the living standards of families on low incomes.

It is the difference between comfort and pain.

That is true. Most parents are aware of the difference it can make to a family. It also has beneficial knock-on effects in that children from different backgrounds interact and share knowledge. Some great friendships have developed from such child minding.

I acknowledge the difficulties the Minister outlined on Committee Stage and I am sure he will not accept this amendment. However, it highlights a wider problem in our tax law which he must address. While I accept the argument about people who set up businesses and care for large numbers of children. I am concerned that many of them may not be qualified and may not adhere to proper safety standards. There is an urgent need to set up a national register of people involved in child minding, particularly those running businesses.

While we may not be able to deal with these problems today, we must deal with them in the future. At the same time, we must have regard for those who need to earn extra money. Child minding involves the productive use of money and people benefit from it. As the Minister said, small sums of money can make a difference between pain and normal living standards. We must create the environment to allow that happen with the least amount of bureaucracy and red tape and employers and employees should benefit. I do not propose to address the sweeping changes that are taking place in Europe — house husbands and so on. I support this amendment which deals with the much broader issue of tax law.

This is a complex area. Some of us may recall a time in our childhood — I am fortunate enough to be able to do so — when our parents were in a position to employ a person to live in and mind the children. This involved the simple obligation to buy a stamp in a post office once a week which the employee placed in a book which she carried to all other places of employment. It was a flat rate stamp, not pay related, and the employee and employer were in the system. It was a non-bureaucratic transaction involving the type of work which provided a good deal of employment and, in my case, many happy memories. The present system is complex and must be simplified, but not in a way that would diminish employees' entitlements. Time has moved on and we are not talking about the type of relationships that existed 40 or more years ago.

To alleviate the concerns of Deputy McDowell and others about benefit-in-kind, the créche that will be established in this complex later in the year will be open to Members and staff of the House on a first come first served basis, although some priority may be given to Members. Benefit-in-kind will not apply because the parents of the children who are cared for in the créche will pay the going market rate. The only facility provided will be the capital resources to set up the créche which is a standard procedure modelled on the créche facilities in Aer Rianta and elsewhere. The Revenue Commissioners do not deem it a benefit-in-kind no more than the subsidised canteens in Irish Life or Dublin Corporation. The capital infrastructure will be put in place by the employer or the sponsoring organisation following which the operation will be run on a pay-as-you-go basis, similar to the system in the restaurant.

Deputy McCreevy and I have reentered this human market with great joy.

And declare our interests.

The joy is apparent.

It is like watching a favourite film for the second time; one waits for the good bits to come.

We will not be able to address this problem on Report Stage, but Deputies have put down markers in this regard. The matter must be addressed for a number of reasons. We have heard horror stories about child care and Deputy Geoghegan-Quinn correctly referred to the need for a register. There is a necessity, a vocational desire, an economic obligation, or a combination of all three, for parents, particularly women, to keep a foot in the labour market. Many people in the public service who want to have a family — a fairly natural inclination — would like to spend time with their children at the crucial stages in their formation and retain the right to return to work. Public service labour market laws are very rigid in this regard. People can job-share on a week-on week-off or morning-afternoon basis, but perhaps we should introduce job-sharing on a three year out basis with back to back deals. There should be more flexibility in this area. This is not a taxation issue, but a question of regulating the labour market to ensure people who wish to remain in the white economy can do so.

It should enable people in the black economy who wish to do so to come out and work as a childminder in five different households on five days of the week and legitimately accumulate social welfare entitlements, while at the same time their five separate employers are kept on-side and are also tax and legally compliant. Frankly, it is extremely complex to be compliant in that regard — and I have had direct experience of this. Many people give up and pay in cash.

There are some people who do not want to come out of the black economy because it suits them better. There is a separate issue which we addressed earlier in the context of the construction industry.

There is also the question of going down what Deputy Cullen described on Committee Stage as the Scandinavian road of focusing entirely on away-from-home créches for very young children. People are having second thoughts after 30 years about whether this is the right kind of model — I have encountered this briefly with people who have experience of Scandinavia. There are questions about whether people want to have their child in a créche at nine months of age as distinct from having somebody come to the house to mind the child or transferring the child to the company of other children across the street to be minded by somebody who is minding children anyway. The turn-of-the century practice of putting a child into a créche from three months to four years of age and then into primary school, the classical model that we all seem to start with, is generating sufficient reservations among many people for us to say that we should not assume this model to be necessarily a valid one. It may be valid for some, but not for all.

For obvious reasons I cannot accept the amendments, and I do not think the Deputies opposite are pressing them. We need to work at this, and the taxation component is only part of it. We need to have flexibility in the labour market and in terms of contracts of employment. We should not overburden small employers with additional responsibilities because they do not have the numbers to provide the cover associated with this. We need also to simplify our bureaucratic systems. All those things go above and beyond the realm of tax.

My instinct is to give a tax allowance for the purposes of childminding if, all other things being equal, that has the consequential effect of generating additional legitimate employment. Otherwise it would be virtually impossible to justify and there would be great objection to creating a bias in favour of two people working outside the home by giving them an additional tax relief, while giving no such tax relief to somebody who has opted to stay at home for a number of years, foregoing the external income he or she could earn. There are horrendous complications which we discussed at some length on Committee Stage. Having regard to a famous speech delivered not a million miles away from here in the National Gallery, there are some colleagues in Government who could put legs, wings and arms to that debate and give it a very legitimate sense of concern.

I will undertake to look at the question. We asked the tax strategy group to look at it last year, but they were not conclusive in their recommendations. If the parties opposite have contributions to make, we will certainly listen, but there is no simple answer to this. I will undertake to make the bureaucratic requirements associated with the current law easier to comply with.

I thank the Minister for the open and positive attitude he has had to this section on Report Stage and on Committee Stage. We had a wide-ranging debate and contributions from Members which covered a broad spectrum of socio-economics, not just taxation measures. I know the Minister will look at this matter as favourably as possible not just because of the tax implications but because of the social implications. When more thought has been given to the matter, I would envisage a Minister for Finance coming forward in the future with a proposal such as mine.

Amendment put and declared lost.

I move amendment No. 17:

In page 17, between lines 12 and 13, to insert the following:

"9. —Section 154 of the Finance Act, 1994 is hereby amended in so far as it has application to an employment situated in Northern Ireland;

(a) (i) by the substitution of ‘5 consecutive days' for ‘14 consecutive days' in paragraph (a) of subsection (2),

(ii) by the substitution of the following paragraph for paragraph (b) of subsection (2):

‘(b) one of which the individual concerned is absent from the State, and present in Northern Ireland for at least eight consecutive hours during the day,',

and

(b) by the insertion of the following proviso after paragraph (c) of the proviso in subsection (3):

‘Provided that paragraph (b) (i) shall not apply to an employment which is subject to the provisions of Part III of Schedule 6 to the Income Tax Act, 1967, solely by reason of the employment being situated or exercised solely in Northern Ireland.'.".

Amendment put.
The Dáil divided: Tá, 51; Níl, 64.

  • Ahern, Bertie.
  • Ahern, Dermot.
  • Ahern, Noel.
  • Andrews, David.
  • Brennan, Matt.
  • Brennan, Séamus.
  • Briscoe, Ben.
  • Browne, John (Wexford).
  • Burke, Raphael P.
  • Byrne, Hugh.
  • Callely, Ivor.
  • Clohessy, Peadar.
  • Connolly, Ger.
  • Coughlan, Mary.
  • Cullen, Martin.
  • Dempsey, Noel.
  • de Valera, Síle.
  • Doherty, Seán.
  • Foley, Denis.
  • Haughey, Seán.
  • Hilliard, Colm M.
  • Hughes, Séamus.
  • Jacob, Joe.
  • Keaveney, Cecilia
  • Kenneally, Brendan.
  • Keogh, Helen.
  • Killeen, Tony.
  • Kirk, Séamus.
  • Kitt, Michael P.
  • Kitt, Tom.
  • Lawlor, Liam.
  • Lenihan, Brian.
  • Martin, Micheál.
  • McCreevy, Charlie.
  • McDaid, James.
  • McDowell, Michael.
  • Morley, P. J.
  • Moynihan, Donal.
  • Nolan, M. J.
  • Ó Cuív, Éamon.
  • O'Dea, Willie.
  • O'Donnell, Liz.
  • O'Donoghue, John.
  • O'Hanlon, Rory.
  • O'Keeffe, Ned.
  • O'Leary, John.
  • Power, Seán.
  • Wallace, Dan.
  • Wallace, Mary.
  • Walsh, Joe.
  • Woods, Michael.

Níl

  • Ahearn, Theresa.
  • Allen, Bernard.
  • Barry, Peter.
  • Bell, Michael.
  • Bhamjee, Moosajee.
  • Boylan, Andrew.
  • Bhreathnach, Niamh.
  • Byrne, Eric.
  • Carey, Donal.
  • Connaughton, Paul.
  • Connor, John.
  • Costello, Joe.
  • Coveney, Hugh.
  • Creed, Michael.
  • Crowley, Frank.
  • Deasy, Austin.
  • Deenihan, Jimmy.
  • De Rossa, Proinsias.
  • Doyle, Avril.
  • Dukes, Alan M.
  • Durkan, Bernard J.
  • Ferris, Michael.
  • Finucane, Michael.
  • Fitzgerald, Brian.
  • Fitzgerald, Eithne.
  • Fitzgerald, Frances.
  • Flaherty, Mary.
  • Flanagan, Charles.
  • Gallagher, Pat.
  • Higgins, Jim.
  • Higgins, Michael D.
  • Hogan, Philip.
  • Bree, Declan.
  • Broughan, Tommy.
  • Browne, John (Carlow-Kilkenny).
  • Bruton, John.
  • Bruton, Richard.
  • Burke, Liam.
  • Burton, Joan.
  • Kenny, Enda.
  • Kenny, Seán.
  • Lynch, Kathleen.
  • McCormack, Pádraic.
  • McGrath, Paul.
  • McManus, Liz.
  • Mitchell, Jim.
  • Nealon, Ted.
  • Noonan, Michael (Limerick East).
  • O'Keeffe, Jim.
  • O'Shea, Brian.
  • O'Sullivan, Toddy.
  • Owen, Nora.
  • Penrose, William.
  • Quinn, Ruairí.
  • Ring, Michael.
  • Ryan, John.
  • Ryan, Seán.
  • Shortall, Róisín.
  • Stagg, Emmet.
  • Taylor, Mervyn.
  • Timmins, Godfrey.
  • Upton, Pat.
  • Walsh, Eamon.
  • Yates, Ivan.
Tellers: Tá, Deputies D. Ahern and Callely; Níl, Deputies J. Higgins and B. Fitzgerald.
Amendment declared lost.

I move amendment No. 18:

In page 18, to delete lines 42 to 48 and substitute the following:

"‘Provided that where trading stock of a trade of farming is transferred by a farmer (in this proviso referred to as "the transferor") to another farmer (in this proviso referred to as "the transferee"), the transferor and the transferee may jointly elect.".

We discussed this amendment on Committee Stage and it meets the concerns expressed by Members.

This amendment gets over a difficulty raised by the farming community in order to give certitude to a particular section regarding the transfer of stock. I thank the Minister for tabling this amendment.

Amendment agreed to.

I move amendment No. 19:

In page 20, line 13, to delete "years" and substitute "year".

This is a technical drafting amendment.

Amendment agreed to.

Amendment No. 20 is in the name of the Minister. I observe that amendment No. 40 is an alternative and I suggest that amendments Nos. 20 and 40 be discussed together.

I move amendment No. 20:

In page 20, between lines 20 and 21, to insert the following:

"15.—(1) In this section—

‘academic year', in relation to an approved course, means a year of study commencing on a date not earlier than the 1st day of August in a year of assessment;

‘approved college', in relation to a year of assessment, means

(a) an institution which provides courses to which a scheme approved by the Minister under the Local Authority (Higher Education) Grants Acts, 1968 to 1992, applies, or

(b) a college approved of by the Minister for the purposes of section 6 of the Finance Act, 1995;

‘approved course' means a part-time undergraduate course of study in an approved college which—

(a) is of at least 2 academic years duration, and

(b) in the case of a course provided by a college to which paragraph (b) of the definition of approved college relates, the Minister, having regard to a code of standards which, from time to time, may, with the consent of the Minister for Finance, be laid down by the Minister in relation to the quality of education to be offered on such approved course, approves of for the purposes of this section;

‘the Minister' means the Minister for Education;

‘qualifying fees', in relation to an approved course and an academic year, means the amount of fees chargeable in respect of tuition to be provided in relation to that course in that year and which, in relation to a course to which paragraph (b) of the definition of approved course relates, the Minister, with the consent of the Minister for Finance, approves of for the purposes of this section;

‘qualifying individual' means an individual other than an individual who has been conferred with a certificate, diploma or degree in respect of the completion by him or her of an undergraduate course of study of not less than 2 academic years duration.

(2) (a) Subject to the provisions of this section, where, for a year of assessment (being the year 1996-97 or a subsequent year of assessment), a qualifying individual makes a claim in that behalf, makes a return in the prescribed form of his or her total income and proves that he or she has on his or her own behalf made a payment in respect of qualifying fees in respect of an approved course for the academic year in relation to that course commencing in that year of assessment, the income tax to be charged on the qualifying individual for that year of assessment, other than in accordance with section 5 (3) of the Finance Act, 1974, shall be reduced by an amount which is the lesser of

(i) the amount equal to the appropriate percentage of the aggregate of all such payments proved to be so made, and

(ii) the amount which reduces that income tax to nil.

(b) In this subsection ‘appropriate percentage', in relation to a year of assessment, means a percentage equal to the standard rate of tax for that year.

(3) For the purposes of this section a payment in respect of qualifying fees shall be regarded as not having been made in so far as any sum, in respect of or by reference to such fees, has been or is to be received either directly or indirectly by the qualifying individual from any source whatsoever by way of grant, scholarship or otherwise.

(4) (a) Where the Minister is satisfied that a college, within the meaning of paragraph (b) of the definition of approved college, or an approved course in that college, no longer meets the appropriate code of standards laid down, the Minister may, by notice in writing given to the approved college, withdraw, with effect from the year of assessment immediately following the year of assessment in which the notice is given, the approval of that college or course, as the case may be, for the purposes of this section.

(b) Where the Minister withdraws the approval of any college or course for the purposes of this section, notice of its withdrawal shall be published, as soon as may be, inIris Oifigiúil.

(5) On or before the 1st day of July in each year of assessment, the Minister shall furnish the Revenue Commissioners with full details of all

(a) courses,

(b) colleges, and

(c) the amount of qualifying fees, in respect of courses, referred to in paragraph (a), for the academic year commencing in that year of assessment, which, in accordance with the foregoing provisions of this section, the Minister has approved of for the purposes of this section.

(6) All such provisions of the Income Tax Acts as apply in relation to claims for the deductions specified in sections 138 to 142 of the Income Tax Act, 1967, shall, with any necessary modifications, apply in relation to a claim for a reduction of income tax under this section.

(7) Section 198 (inserted by the Finance Act, 1980) of the Income Tax Act, 1967, is hereby amended, in subsection (1) (a), by the insertion of the following subparagraph after subparagraph (xvi) (inserted by the Finance Act, 1994):

‘(xvii) so far as it flows from relief under section 15 of the Finance Act, 1996, in the proportions in which they incurred the expenditure giving rise to the relief,'.

(8) If any question arises as to whether

(a) a college is an approved college, or

(b) a course of study is an approved course,

for the purposes of this section, the Revenue Commissioners may consult with the Minister."

A number of Deputies tabled an amendment for Committee Stage concerning tax relief on third level fees. I listened carefully to the sentiments that animated the debate and I indicated then that in principle I was prepared to accept the application of the argument proposed on the understanding that any amendment would be confined and circumscribed in a particular manner.

The text of the amendment we have drafted is based on the principles I enunciated on Committee Stage. The philosophy underpinning the amendment is that, in essence, where a person leaves second level education and goes to work but decides later to go back to college to improve their education and undertakes a part-time course and where that course is a two year course recognised by the Department of Education and, by extension, the NCEA — for the purpose of drafting the amendment, the Department of Education is the body to which I refer — there will be tax relief at the standard rate in order to offset the cost of fees. If the parents of such person pay the fees they may not claim tax relief on them.

The text of the amendment is quite descriptive. In many cases, a company and most Government Departments will pay education fees subject to clarification and certification. Where the employer organisation pays the fees for a person in part-time education it will not be possible to claim double relief but where an employer organisation would be capable of claiming tax relief and for a variety of reasons decides not to so do we have made it very clear there is no onus on the employee student to produce evidence of that. We have simply made it very clear that double relief cannot be granted. I have moved some direction in meeting the spirit of the proposal put forward by Fianna Fáil.

I have to correct what I said on Second Stage. I recall saying that it is never the Minister's intention in a Finance Bill to change one iota of what is before him. I have to withdraw that accusation in respect of this Minister, Deputy Quinn. He had not planned to make any changes in this regard but having listened to all sides of the argument he did so during the debate. This proves that even on the Finance Bill. one can get the Minister of the day to change his or her mind on Committee Stage.

I honestly believe from the initial contribution on Committee Stage that it was not part of the Minister's brief to agree to the amendment I tabled. We had a very good debate on Committee Stage. I think the argument that has convinced the Minister to make a gesture in this regard is that people such as he and I were lucky to have parents who pushed us and made sacrifices to send us to third level but that was not an option for all of my friends at primary school. I welcome what the Minister has done and I thank him for this gesture. It was obvious on Committee Stage that he was receiving advice to the contrary from some of his officials, for whom, incidentally, I have great respect.

The Minister's amendment is closely targeted. When in Opposition, one would like such provisions to be as wide as possible. However, the amendment is fair. The qualifying individual will be one who was not able to avail of third level courses, as I have so described. In addition, the relief is standard rated, in line with attempts to provide all reliefs at this rate.

The Minister promised an amendment on Committee Stage which would be targeted. However, the definitions are wide enough to accommodate various courses. Doubtless this was the cause of debate among departmental officials. I remarked on Second Stage that Ministers never change their minds during the course of the Finance Bill. I was wrong and I am glad to admit it.

I thank the Minister for responding in a positive way to the debate on Committee Stage and to the amendment that was put down on part-time students. It illustrates that the democratic forces can work to some degree. An individual in Glasnevin who wrote to every member of the Fianna Fáil Parliamentary Party and other parties and sought a meeting with Deputy McCreevy set the ball rolling. We committed ourselves to putting down the amendment on Committee Stage. There was also lobbying on the Government side. It is good to think that an individual can be a catalyst in moving us all in the direction of change.

I welcome the broad objective of the amendment. I recognise the Minister is limited by financial circumstances. However, there may be a difficulty with that part of the amendment which states:

...‘qualifying individual' means an individual other than an individual who has been conferred with a certificate, diploma or degree in respect of the completion by him or her of an undergraduate course of study of not less than 2 academic years duration.

There is a tendency for students in the regional technical college sector, for example, to complete a two year certificate course across a broad range of subjects and go into the workplace where further qualifications are required for advancement. Many return, therefore, to undertake perhaps a one year part-time diploma course, with the hope of moving on to a degree course.

While I acknowledge the financial limitations of the Minister, it would be logical to extend the provision, perhaps in next year's Finance Bill, to such certificate students. There is a direct correlation between their input into the development of their personal skills and the return to the economy, given that the skills base of many companies will be increased.

This is especially true of the regional technical college sector. Where an undergraduate student at university will complete a degree programme, there tends to be stronger interaction in the regional technical college sector between the academic and industry. Many students leave the regional technical college after obtaining their certificates but then return to complete a diploma. In doing this they are developing a ladder of progression. We no longer have rigid demarcation lines between various qualifications and hopefully people will always be able to progress.

In the context of reform of the higher education grants scheme, we must look at those workers who fall below the income tax threshold and are attending courses. Perhaps they could be assisted under the higher education grants scheme.

I thank the Minister for responding. This represents a breakthrough for many students, especially for those who never had the opportunity of pursuing full-time third level education and who had to go to work in the first instance. The statistics show that adult education, indeed education generally, is a growing phenomenon. The report completed by the steering committee shows that the number of part-time students is staggering. It will be an increasing phenomenon. It is important that we recognise and encourage it because the spin-off to society and the country will be greater. Any study of the economic development of the country over the past 39 to 40 years will show that there is a strong correlation between our investment in education and success in the economy. Many people attribute economic growth to the education policies of the 1960s and to Donough O'Malley's free education scheme. Even the officials who are perhaps trying to limit the Minister's enthusiasm will recognise that there is a payback at some stage to society.

I spoke at length on this issue on Committee Stage. I commend the Minister for the approach he has taken. He said he would consider the matter and he has produced a substantial amendment.

In so far as it refers to the two year academic course, the amendment has a limiting effect on the regional colleges. In Waterford, many students commence certificate or diploma courses which enable them to get better quality work. In the workplace they see opportunities for progress and they want to return to college to get the extra qualification leading to a degree. Many of the regional colleges, especially the one at Waterford, offer a staggering number of degree courses. Over 50 per cent of courses offered by the college at Waterford are degree courses. In this respect I have been seeking clarification from the Minister for Education on the distinction in definition between a regional college and a university.

The mix in third level institutes has encouraged students to progress from one course to the next and to further their education. Everybody realises the benefits of qualifications for careers. The situation at Packard Electric Ireland Limited has highlighted this again. People with low level skills have increased difficulties in getting stable employment, while those with qualifications have access to better opportunities. The figures on this are staggering.

I understand the provision as it relates to courses of two academic years duration. However, many courses today target those who left the system and started work without any third level qualifications and are designed to get them back into the system. Previously, many outside were deterred by the length of courses — often three to four years. However, as courses have become designed to be completed in parts, from certificates to diplomas to degrees, many of them produce a qualification after one year while also encouraging the student to pursue further studies. The regional colleges have been to the forefront in this.

Perhaps the Minister would indicate the cost implication of the amendment; I doubt if it is very high. We all want to see what effect it will have in the coming year.

We must encourage people to improve their standard of education and ensure finance is not a barrier to access to third level education, which should be open to all students where feasible. This is a step in that direction. I welcome the amendment and hope its interpretation will be broadened in the future.

This is a welcome measure, although I have a few reservations which should be voiced. The term "qualifying individual" is overly restrictive in one sense and open to abuse in another. A person could do a course, say he does not want to be conferred with a degree and get an extra two years tuition fee on that basis. A person came to my clinic to point out that under the university scheme she was in an unfortunate situation because one of her colleagues had failed the final examination and got the benefit of the tuition fees as she was not a graduate and was therefore entitled to start again. My client wanted to do another course in UCD but was not eligible under the scheme because she had a qualification. The Minister should look at the qualifying issue for next year. It seems to discriminate against a person who wants to start again for a bona fide reason in favour of somebody who reaches the end of a three year course but decides to do something else. I have come across such a case; it is not a notional one.

This states that the undergraduate course should be of not less than two years academic duration. Does it have to be an approved course in a recognised institution? It does not seem to have to be but if a person spends time getting a qualification in an unapproved course, he is out of court for this. That should be thought through and it would have been if we had more time to think about it.

As regards the appropriate percentage, it is harsh to set this relief at the standard rate given that there are single workers earning below the average industrial wage paying 48 per cent tax. I do not know many married people who would go back to college; perhaps there are some but to give single workers earning below the average industrial wage paying 48 per cent tax a 27 per cent relief is too modest.

I appreciate the welcome this amendment has been given and the observations made. We have a long road to travel and I empathise with the point made by Deputy McCreevy. When I listened to the arguments put forward I contemplated, not for the first time, my good fortune in having parents who had the wherewithal and the motivation — there were people with the wherewithal but not necessarily the motivation — to deny themselves a consumption in their own time so their children could have it in the form of an investment in education. If I had not had that good fortune, I suspect I would have ended up on a building site, perhaps as a carpenter of a developer. God knows where I would have ended up after that.

Very rich.

He might have joined the Progressive Democrats.

To be a carpenter would have been my natural inclination. I was fortunate in life. I remember my late father saying, when the family business had gone under, the one thing a bank, recession or liquidator cannot take away is a professional qualification. That spirit has informed a generation and equipped it with the wherewithal to travel happily through life — I hope — not just on this island, but elsewhere.

This is to rebalance the playing pitch for a specific category, but we cannot be as generous as we would like. Deputy Cullen asked about the cost which will be approximately £1 million. Although we do not know the take up, it will be of the order of £1 million to £2 million. The reason it is circumscribed and constrained — Deputy McDowell referred to this — is to try to mainstream it with other courses which, in the normal course, would be seen as ones that would enhance people's employment prospects and, therefore, their prospects in life. It is, to that extent, labour market orientated. It is not designed to enable somebody to fulfil a personal non labour market orientation. We are using other taxpayer's money in effect to enable them to enhance their own marketability in the labour market. That is the logic which informs this and the reason courses must be approved by the Department of Education or a subsidiary body of the Department like the NCEA whichinter alia approves courses with some labour market relevance or reference.

If we were not to accept that discipline in the context of moving from a Committee Stage to a Report Stage amendment, it would be "Open Sesame" as regards what constitutes a course and what the purposes of that course may be. I do not mind people spending their money on a course, but if we are to give them tax relief, which means using taxpayers' money or foregoing legal taxpayers' obligations, it must have some objective that can be justified. The justification I am giving to this relates to what makes somebody a carpenter rather than an architect. The difference is a chance at third level education. In this instance, the chance at third level education is determined by the criteria we set out in the amendment. I would like to think this could be expanded in due course.

We are moving towards a situation — Packard Electric is a graphic example of it — where we will probably invest more in human capital over the next 20 years than in physical capital. It is the most precious and unique resource we have and it will ensure that certain kinds of economic activity and, consequently, wealth creating ability will remain on this island. We will not be able to withstand international competition and pressure from labour markets like the Pacific rim or parts of Eastern Europe with wage rates of £200 per month as against £12,000. Tricking around with PRSI or income tax rates will not bridge that gap.

The only way we can maintain and enhance our ability to consolidate and grow wealth on this island is to invest in human capital over the next ten, 15 or 20 years. This is a small step. It is not dramatic but it clearly sends a signal which I hope will be amplified in years to come, subject to available resources, that if people leave secondary school and find themselves on the adult labour market without a third level qualification and if they are prepared to use their own money to pay for courses which will enhance their labour market attractiveness, the rest of the taxpayers will ease the tax burden on their shoulders for the duration of these courses with respect to the cost of fees. This is modest but it is a symbol and a signal which I hope will be recognised.

I do not want to let the debate pass without mentioning the plight of post-graduate students.

That is for another day. They are on the bottom deck of a double decker bus. They can make their own way to the top. We must get everybody on to the bottom deck.

We tend to regard post-graduate education as a luxury and think that such students should have been working long ago and do not need any support. The STIAC report and other reports on post-graduate education show that it is the most under-provided for sector. However, it is an important sector in terms of economic development and investment in human capital. Next year we must look seriously at post-graduate education.

Amendment agreed to.

I move amendment No. 21:

In page 20, between lines 20 and 21, to insert the following:

"15.—The figure of ‘50 per cent' shall be substituted for the figure of ‘15 per cent' in section 236 (1A) and the figure of ‘100 per cent' shall be substituted for the words ‘one fourth' in section 235 (2) of the Income Tax Act, 1967.".

We discussed this issue on Committee Stage. I tabled this amendment to raise the question of pensions. Since then the Minister has brought forward an amendment which provides for a change in the qualifying contributions which individuals can make if they are over 55 years of age. These contributions have been increased from 15 per cent to 20 per cent. I cannot remember such a change in my political lifetime.

By introducing that amendment, the Minister recognised that we have to give serious consideration to the pensions issue. People are more likely to do something if they are given a tax break and we will have to proceed further down this road. Other jurisdictions allow varying contributions to pension funds as people become older. I recently read an article which pointed out the anomalies which exist between employees of companies, people who are the directors and owners of their own firms and people who are self-employed.

When most businesses develop beyond a certain size, they incorporate themselves and try to grow from that base. Companies are allowed to put as much as they like into pension schemes for directors and this is allowed as a tax deduction against profits. The amount of money which directors can take on retirement, usually from the age of 60 onwards, is restricted to the salary they have been paid for the previous three years. The Revenue Commissioners look at this fairly strictly.

People who own companies can put a considerable amount into their pension funds. However, sole traders or those in partnerships cannot do this. They are restricted to the 15 per cent net relevant earnings rule, although they can carry forward contributions to a further year. At 35 years of age people should be given tax relief on their contributions at a certain percentage; at 40 years of age this relief should be at a higher percentage and so on. It is only when many business people are in their 40s that they begin to think about providing pensions for themselves.

This amendment recognises that in years to come, even with the best will in the world and no matter what growth there may be in the economy, it will not be possible for the State to provide care and hospital facilities for all old people. A person who builds up a pension fund can only draw one quarter of this fund when he or she receives a pension. The remainder must go towards providing an annuity which will be paid for the rest of the person's life depending on whatever arrangements are made with the company. This is strictly confined by the Revenue Commissioners under present law. We should enable individuals to have more control over their pension funds, in order to provide not just for incomes but also for health and hospital care during their retirement.

Other countries are considering this. Because of the demographic situation in this country, policy makers will have to address this in the near future. There is a belief in most developed countries that people should no longer be able to rely totally on State pension funds when they reach retirement age. There is a body of thought that individuals should be compelled to provide private funding.

Employees are also allowed make additional voluntary contributions to their pension schemes. Directors who own their own companies can pay as much as they like into their pension funds. Employees who are thrifty and think far enough ahead can put more money into their pension funds and obtain tax relief. However, individuals who are self-employed are restricted to the 15 per cent net relevant earnings rule.

The Minister and the Department are probably familiar with the arguments to streamline this area. It should be a policy objective to encourage people to provide more for their pensions. The statutory social welfare pension has become a smaller percentage of the average industrial wage than it was 20 years ago. Even with the best will in the world, future Governments will be constrained to this area because of the population age structure and State pensions will become a smaller proportion of what people will earn coming up to retirement. The taxation system should be used to encourage people to provide for their own pensions. This is the purpose of my amendment and should be further considered.

I warmly support the amendment but I think it would be unfair in my favour if I could put 50 per cent of my income each year into such a fund and take out 100 per cent the day I reach the relevant age. I would appreciate this but I could not put my hand on my heart and say this would be a fair arrangement. I am glad that, by tendering this amendment, Deputy McCreevy has elicited movement from the Minister on this front. I hope the Minister will ask the Revenue Commissioners to draw this change in the law to the attention of the self-employed. The 15 per cent rule is so ingrained in people's minds that even if they are told with a few weeks to go to the next accounting period that the relevant category of people are entitled to more, they will not have provided for it. Many of them will not make proper provision for themselves. The Minister should ensure that the Revenue Commissioners spend some of their advertising budget to draw this to the attention of those to whom it applies.

The majority of people in my own profession are unaware that this change is being made. The vast majority of 55 to 65 year-old people will not put aside enough money to comply with it unless they are warned by their accountants. In most cases this is such an ingrained rule that unless they have an accountant who takes the trouble to advise them in advance——

And knows their age.

——yes, they will not avail of it.

I acknowledge the points made by the Deputies. No doubt if Deputy McCreevy found a self-employed person encountering the difficulties he has just described, a bit of friendly accounting advice would recommend converting their status into that of a company so that they could avail of the benefits he has described. That option may not be open to a number of self-employed people.

We are not in a position to accept the proposal in the Fianna Fáil amendment which would provide 100 per cent relief for the lump sum. That would dislodge the present set of relativities. The assumption is that the 25 per cent — one quarter of the lump sum — that can be drawn down on the annuity, a tax free amount, is similar relative to the computation terms of the 18 months salary for an employee who is deemed to be eligible. I do not know when these relativities were made but that relativity currently prevails.

That is correct.

However, all these relativities have to be recalculated in the light of changing work circumstances.

In the event that I did not say this on Committee Stage, let me confirm that the whole question of the tax treatment of pensions, having regard to the changing pattern of work and work contracts, which is a feature of modern life, is under review between my Department and the Irish Association of Pension Funds. As I said outside the House, there is a need to realign the tax treatment of pension provisions with current labour market contract employment practices.

On the point made by Deputy McDowell about the 15 per cent provision, I will request the Revenue Commissioners, and others, to ensure that that information is properly conveyed through the channels that are open to them. Deputies may be interested to hear that the current 15 per cent relief is availed of by some 53,000 taxpayers and costs an estimated £40 million in a full year. The average deduction claimed is 8 per cent of net relevant earnings with only 12 per cent of claimants claiming the full 15 per cent or close to it. It is these persons who, in the main, will benefit from any increase.

The increase to 20 per cent for those aged 55 or over is estimated to cost approximately £2 million in a full year. On the other hand implementing Deputy McCreevy's amendment would cost close to £17 million on a full year basis. That would be the total cost but, if we assume that 50 per cent of those eligible would avail of it, the cost would be about £8 million.

I have made some progress in this regard. I hope the study by the IAPF will give us some greater steer. We all share the same objective of making adequate pension provision so that people do not become a burden on the State.

I recognise what the Minister has done. He is the first Minister that I can remember who has made any move in this area, and it would be churlish of me not to congratulate him. I welcome the fact that the tax treatment of pensions is being examined by the Department of Finance. As the Minister rightly said both in this House and elsewhere, changing work practices necessitate changes in pension legislation.

The pensions Act under the aegis of the Minister for Social Welfare is one of the foremost of its kind in the developed world. The way we treated pensions in legislation in preparation for the divorce referendum is a model for any developed country. We are forward thinking in this regard but we will have to continue to be so.

Some years ago when this was brought home to me and long before I thought of it in regard to my position, I reflected on what applied to people such as Deputy McDowell inadvertently referred to. There are some professions——

Accountancy being one of them.

——where one can have a large income in one year and not so great an income in other years. In the profession Deputy McDowell referred to, one generally builds up the stake but he is involved in a peculiar profession that is a bit like architecture where one can have a big income in one year and a very small income the following year.

It came home to me most forcibly in regard to professional sports persons who lobbied me some years ago. They showed me the way the United Kingdom's Inland Revenue treated sports persons. Long before the demographics of the Irish situation impinged on me, that made me think it would be worth making changes in regard to particular activities. In considering pensions tax treatment the Minister should also take into account special occupations or professions.

I thank the Minister for the change he made in this year's Bill which signals his good intentions. I will not press my amendment.

Amendment, by leave, withdrawn.

Amendments Nos. 22 and 22a are related and may be taken together, by agreement.

I move amendment No. 22:

In page 36, before line 1, to insert the following:

"25.—(1) Section 41 B (inserted by section 35 of the Finance Act, 1995) of the Finance Act, 1994, is hereby amended in subsection (1) by the substitution of the following for the definition of ‘the relevant local authority':

‘"the relevant local authority", in relation to the construction or refurbishment of a multi-storey car park, means—

(a) the corporation of a county or other borough or, where appropriate, the urban district council, or

(b) in respect of the administrative county of Dún Laoghaire-Rathdown, the administrative county Fingal or the administrative county of South Dublin, the council of the county, in whose functional area the multi-storey car park is situated.".

(2) Subsection (1) shall be deemed to have applied and have effect as on and from the 1st day of July, 1995.".

I am conscious of the time factor and the fact that Members may wish to comment on other amendments so I will not make a long speech. This tax relief for multi-storey car parks is an anomaly for Dublin city and county. It should have been extended to local authorities that have an urban core such as Dún Laoghaire. They were omitted for reasons of history, drafting and oversight in that order. This is a correction on our part, and amendment No. 22a intends to do the same thing. The amendment will create the position that was intended.

I am grateful to the Minister for accepting the amendment in my name and that of Deputy McCreevy. The Minister's amendment probably reads better in grammatical terms. It is important that capital allowances in relation to the construction or refurbishment of certain multi-storey car parks are extended to the administrative area of Dún Laoghaire-Rathdown.

I am not certain whether it is a good idea to support the building of multi-storey car parks because we know they are ugly manifestations of the way the motor car has destroyed the infrastructure of cities and rural areas. However, we must live up to the demands of the present and, in certain circumstances, it is required that we should have multi-storey car parks which are ugly structures.

Designed by a good architect, they can be quite elegant.

Perhaps, but I cannot imagine a multi-storey car park, even designed by a good architect, being incorporated into the magnificence of Dún Laoghaire harbour.

My colleague, Deputy McCreevy, kindly supported this issue. I support this amendment because of the arrival of the HSS ferry in Dún Laoghaire harbour and the magnificent development there of which I humbly happen to be the author. It has now found universal acceptance. On the basis that 375 cars will come into Dún Laoghaire on one sailing — there are five sailings a day — one can understand why it is necessary to have multi-storey car parks. In the meantime, we must get on with the development in Dún Laoghaire. I saw this as the psychological key to ongoing development which is now happily spreading throughout the community and has found universal acceptance.

I thank the Minister for responding to the amendment I tabled on Committee Stage. I am glad the call from the county manager of Dún Laoghaire-Rathdown County Council has been heard.

What is the significance of stating that it will have effect from 1 July 1995? I am not against it but I am interested as to why that is the case. I am glad it is being extended to Fingal because if Deputy Ray Burke gets no satisfaction as regards turning the foreshore in Balbriggan into a holiday riviera, at least he may get some satisfaction if a multi-storey car park is built there.

I will allow the Deputy to convey that information.

Why do architects build multi-storey car parks on street fronts? They are not usually beautiful buildings, although there are exceptions. Why do Dublin Corporation and its architects not put them behind other buildings where we would not have to look at them? For some reason they are always on the street front where they look ugly. They could be hidden away in a back street or approached through an archway in a more decent building. That has been done at Christchurch where the multi-storey car park cannot be seen.

The starting date of 1 July 1995 is to provide for continuity in the legislation because the other legislation came into effect at that time. It is being extended to the other two Dublin local authorities, which were carved out of Dublin County Council, for reasons of consistency. As regards design, ideally it should be an edifice which is clad by an external skin. It is a difficult project to design.

I acknowledge Deputy Andrews's steadfast commitment to the Stena Sealink facility in Dún Laoghaire. He expressed a lot of worry at the time. The car park facility will enhance it and ensure the success of that substantial development.

Amendment agreed to.
Amendment No. 22a not moved.

I move amendment No. 23:

In page 36, lines 8 and 9, to delete "24th day of January, 1999" and substitute "25th day of January, 1999".

This is a drafting amendment.

Amendment agreed to.
Amendment No. 24 not moved.
Bill recommitted in respect of amendment No. 25.

I move amendment No. 25:

In page 37, to delete lines 24 to 32 and substitute the following:

27. Section 255 of the Income Tax Act, 1967, is hereby amended in subsection (1) by the insertion of the following additional proviso after the proviso to that subsection:

"Provided also that expenditure incurred by a person on or after the 23rd day of April, 1996, either on the construction of, or on the acquisition of the relevant interest in, a building or structure which is not situated in the State shall not be treated as expenditure on a building or structure within the meaning of this section unless, being a building or structure not situated in the State—

(a) it is a building or structure which is to be constructed or which is in the course of construction and in respect of which it can be shown that—

(i) the said person has either entered into a binding contract in writing for the acquisition of the site for the building or structure or has entered into an agreement in writing in relation to an option to acquire the said site on or before the 23rd day of April, 1996, and

(ii) the said person has entered into a binding contract in writing for the construction of the building or structure on or before the 1st day of July 1996, and

(iii) the construction of the building or structure had commenced on or before the said 1st day of July and had been completed before the 31st day of December, 1997, and

(b) it is a building or structure to be constructed or which is being constructed which will be used for the purposes of a trade the profits or gains from which are taxable in the State.'.".

I understand the essence of the amendment in the name of Deputy McCreevy has been incorporated in this amendment. I hope the Deputy is satisfied with that incorporation.

I brought this matter to the Minister's attention on Committee Stage. I am worried that we could catch genuine business people. The capital allowance provisions of the Income Tax Act, 1967, which allow taxpayers to claim capital allowances on industrial buildings, were being used legitimately as a tax avoidance measure. If a person found a building anywhere in the world which had been built in the past ten years, they were allowed to claim it against their profits. This practice was known to the Revenue Commissioners and to officials in the Department of Finance and they were taking action in this regard.

This amendment is closing that loophole. Industrial buildings allowances were not designed so that people could claim an industrial buildings allowance for a building on the Rock of Gibraltar. Although I do not normally point out loopholes to the Minister, even the most liberal tax adviser in this city would appreciate that sooner or later this loophole would have to be closed. However, I do not want to catch legitimate business people.

Paragraph (b) means that a person will not be able to get capital allowances on industrial buildings as a tax avoidance measure unless it is a "building or structure to be constructed or which is being constructed which will be used for the purposes of a trade the profits or gains from which are taxable in the State." My amendment inserted the words "in the State" after "building or structure". I understand why this amendment is worded in this way because other buildings which are being constructed must be covered. However, I do not want to catch the legitimate hotelier who pays his taxes here but who may want to build a hotel abroad. I understand that by inserting paragraph (a) nobody will be able to use it after these dates. It was not my intention when tabling this amendment on Committee Stage to catch such people. Is it not possible to take out paragraph (a) and leave paragraph (b)? That would mean that legitimate hoteliers who operate here but who want to build a new hotel abroad would not be caught. I am afraid legitimate operators will be caught. Perhaps the Minister could clarify that. As I pointed out on Committee Stage, the use of this tax avoidance measure must not continue.

I accept Deputy McCreevy's statement. I assure him that the more expanded text contained in the amendment was designed, following consultation with interested players, to meet the concerns of people involved in legitimate businesses which are specifically expanding into Northern Ireland to capitalise on the peace dividend, etc. These people would, if the loophole had been closed in the original manner, have been very adversely affected. The more expansive text contained in the amendment which I tabled, as distinct from the amendment in the Deputy's name which is aimed at closing the loophole, would penalise those people.

That is correct.

I am satisfied that the concerns of all Irish-based organisations using Irish capital which would otherwise be taxed by the Irish Revenue Commissioners were addressed. We are giving that category of entrepreneur a tax break which will enable them to expand outside the State using revenue that would otherwise be deemed to be taxable within the State.

As I understand it, the purpose of the section is to provide for interlapping buildings which are being constructed.

Yes, transition.

They are the transitional arrangements. What will be the situation for an Irish company which decides to further expand into Northern Ireland or elsewhere next June? As the section is now drafted, such companies will not be permitted to claim an industrial buildings allowance.

I hope the information I have received is correct. If not, I will communicate with the Deputy. I understand that such a company would normally act as a subsidiary, not necessarily a taxable entity in this State in the first instance. Due to the fact that it was operating outside the State, it would be deemed, for tax purposes, to be accountable to the jurisdiction in which they were functionally in operation. That is an inadequate reply but the necessary information is not available to me.

I accept the Minister's reply. I am sure that his officials will communicate with me if further information becomes available. I am confident that if there are difficulties with regard to this section the matter will be corrected in next year's Finance Bill. The loophole must be closed and I welcome the Minister's amendment in this regard. I am sure that any difficulties will be remedied in due course. It was never mine nor the Minister's intention to catch out the people to whom I referred.

Correct.

I agree that, in closing a loophole, one should not snap off people's fingers. However, the provisions in subsection (b) are somewhat loose. It would be easy for someone preparing a building for the use of a company trading in Ireland to end that use very rapidly. The terms of the subsection are very loosely written and could be easily complied with.

We will keep the matter under review.

Amendment agreed to.
Amendment reported.

Amendment No. 26 and amendments Nos. 1 and 2 thereto are related and may be taken together. Is that agreed? Agreed.

I move amendment No. 26:

In page 40, to delete lines 4 to 29 and substitute the following:

"(5) This section shall not apply

(a) to expenditure incurred within the qualifying period on the acquisition, construction or refurbishment of a building or structure (hereafter in this subsection referred to as "the holiday cottage or apartment") which is, or is to be, a building or structure to which this section applies if, before the 5th day of April, 1996—

(i) a binding contract in writing for the acquisition or construction of the holiday cottage or apartment was entered into, or

(ii) an application for planning permission for the construction of the holiday cottage or apartment was received by a planning authority, or

(iii) in relation to the holiday cottage or apartment, an opinion in writing was issued by the Revenue Commissioners to the effect that an allowance to be made in respect of expenditure on the said holiday cottage or apartment would not fall to be restricted by virtue of section 24 of the Finance Act, 1991,

or

(b) where on or after the 8th day of February, 1995, but before the 5th day of April, 1996—

(i) expenditure was incurred on the acquisition of land on which the holiday cottage or apartment is to be constructed or refurbished, by the person who incurred the expenditure on the said construction or refurbishment, or

(ii) a binding contract in writing for the acquisition of the said land by the said person was entered into,

and the said person can prove to the satisfaction of the Revenue Commissioners that a detailed plan had been prepared and that detailed discussions had taken place with a local authority in relation to the holiday cottage or apartment.'.".

This is merely a drafting amendment. In moving it, I must mention a technical amendment to amendment No. 26 on page 9 of the list of Report Stage amendments. The reference to "local authority" should be changed to "planning authority" to bring the amendment into line with the reference to "planning authority" in amendment No. 26 (a) (ii). With the exception of An Bord Pleanála, every planning authority is a local authority but not every local authority is a planning authority. That is the legal definition and the reason for the difference.

This amendment represents an attempt to address a point raised on Committee Stage when the Minister of State, Deputy Coveney, held the fort on my behalf. He gave an undertaking to review the transition provisions of the section for Report Stage, with a view to accommodating cases not catered for by the existing transitional criteria, where there was evidence that expenditure had been incurred in good faith on the basis of the existing law. Having carried out that review I am putting forward an amendment, the effect of which is to introduce additional criteria to alleviate the position for transitional cases — for example, holiday cottages.

The new criteria will accommodate those who acquired or contracted to acquire land between budget day 1995, when the scheme was announced, and 5 April 1996 for the construction of holiday cottages or apartments. In such cases, there will, however, have to be evidence that detailed plans of developments were drawn up and that detailed discussions had taken place with the local authority. This will ensure that cases excluded from the new restrictions are genuine and that the land acquired or to be acquired was intended for use in the development of holiday cottages and apartments. It is a form of transitional relief related to apartments and cottages as distinct from any other form of physical development. Manifest, objective evidence will be required to indicate that people had entered into the commitment to develop.

There may be some general confusion with regard to the scope of this provision, which targets only one aspect of the seaside resorts scheme, namely the self-catering area. It does not affect — I regret that this might have been inadvertently conveyed on Committee Stage — the general scheme of seaside resorts, tax designation enhancements and incentives. The provision does not affect the following: hotels, guesthouses, bed and breakfast establishments, holiday camps, leisure and sports facilities, theme parks and interpretative centres, adventure centres, craft centres, entertainment facilities such as theatres, etc., restaurants, cafés and other tourist infrastructure and caravan and camping sites.

This tightening of the provision is exclusively designed for self-catering components — namely, cottages or apartments. It has been designed due to the existence of a legal tax planning scheme which, by leverage, resulted in a much more generous form of relief than was originally intended. Having adequately dealt with the transitional cases, we are returning to the initial intention of the legislation. Deputies expressed concern that the ground rules were being changed in respect of the schedule of reliefs for the items to which I referred a moment ago. However, these stand as before. We are simply tightening the provision of relief in respect of self-catering constructed units, cottages and apartments.

I move amendment No. 1 to amendment No. 26:

In the first line of subsection (5) (b), to delete "on or after the 8th day of February, 1995, but".

I appreciate the Minister's reply and acknowledge that he has taken on board, in the main, comments made on Committee Stage. However, arising from the insertion of the new subsection, there are now two classes of people with the intention of developing a property for the purpose of self-catering accommodation. The Minister has allowed thestatus quo to remain, in that full relief will be given to those who had the ability and wherewithal to purchase land following the enactment of the Finance Act, 1995. Arising from the introduction of the seaside renewal relief last year, people who had been in possession of land for some time took it upon themselves to see how they could use the reliefs contained therein and negotiate with the planning authorities — invariably in areas which are sensitive from a planning point of view — with the intention of developing self-catering accommodation.

If the Minister does not take on board my suggested minor amendment, his amendment will create a situation in which a person who purchased land after 5 April and has been in negotiation with the planning authority will get the relief but a person who was the owner of the land prior to 5 February 1995 and went through the same process and expense of negotiating sensitively with the planning authority to ensure there would be good planning will not be eligible for the relief.

It would be wrong to classify every person who purchased land since 5 February 1995 as a speculator. However, there have been a number of instances where speculators purchased land and are being accommodated. An owner who did not wish to dispose of the land to a speculator or property developer is being discommoded. I agree fully with everything the Minister has said. The safeguard in my amendment would ensure that the last paragraph of that section provides that the only people who will get this transitional relief are those who, following the publication of the Finance Bill, 1995, spoke to the planning authority about the requirement to obtain planning permission in respect of holiday apartments.

By ensuring those negotiations commenced from 8 February 1995 and had been concluded by 5 April 1996 I am not introducing a further category of persons which would involve a substantial loss of revenue to the State or open up that which I acknowledge the Minister is trying to curtail. One must take on board situations where families held on to land and did not dispose of it to a speculator after 5 February 1995. I suggest the number of cases to which I refer is extremely small and I have sent examples to the Minister.

This scheme has been of phenomenal benefit to secondary towns. There has been a loss of revenue but I suggest the passive investment released from savings has the potential to bring the Revenue Commissioners substantial returns in the form of VAT, PAYE and PRSI. The overall loss will be minimal other than the double rent allowance which could be tied to the capital allowance and I accept that should not have been allowed in the first place.

The amendment, which I will press, deals with the small number of hardship cases but recognises that some people do not wish to dispose of their land to property developers and would prefer to develop it in due course.

I do not want to cut across Deputy Hughes but the case I made on Committee Stage was that somebody who had acted substantially to their prejudice on foot of the availability of this scheme should not be left without any adequate remedy. I do not know whether a landowner can claim to be badly prejudiced if all he has done is commission an architect to look at plans. I was talking about people who had entered into a binding commitment to purchase property and were legally bound to continue with that venture. It appeared to me that category of person would suffer serious prejudice if, by an early or premature termination——

I think we are addressing that.

I accept that. However, I believe the last proviso to section 26 (5) at paragraph (b) is still overly harsh. It states:

and the said person can prove to the satisfaction of the Revenue Commissioners that a detailed plan had been prepared and that detailed discussions had taken place with a local authority in relation to the holiday cottage or apartment.

The purpose of that paragraph is to distinguish between people who casually bought land and might now decide to avail of the provision. Surely either of those conditions is sufficient to establish a person's bona fides.

Is the Deputy looking for an either or provision?

The section could be amended to read "and the said person can prove to the satisfaction of the Revenue Commissioners that a detailed plan had been prepared or that detailed discussions had taken place with a local authority". Either of those would establish the good faith element. To insist on both seems to discriminate against somebody who had the plans but did not discuss them in detail with the local authority.

I cannot see any reason the Minister should not accept an amendment to include the word "or" because if either of those two conditions was complied with the Revenue Commissioners' requirement would be satisfied. Somebody who could prove he had drawn up detailed plans and had commissioned an architect but had not discussed them in detail with the local authority would be unfairly discriminated against if the Minister insists on a cumulative rather than alternative set of conditions.

I agree with that point. I am a member of a local authority. At the moment, there is a scarcity of funds and one of the great sources of income is fees relating to planning matters.

This a complex area. Roads, access and sewerage schemes all form part of the planning process. In one case insistence by the local authority on the provision of a road held up the development as the architect could not design it until there was agreement by the corporation. It is an impossible situation where, as Deputy McDowell pointed out, a person cannot meet both requirements. One can negotiate the cost involved but must wait for plans from the local authority to see what roads must be provided or whether an existing road is to be expanded. Many developments are narrow old roads which must be broadened. The developer may construct the road and include the charge with his planning fees.

It is a legitimate point that it would be virtually impossible to meet both requirements. The Minister is probably aware of the difficulties from his own professional experience. However, I accept the overall intent of the Minister's amendment which redresses some of the issues we discussed on Committee Stage.

I had a slightly mistaken impression of the impact of the changes. I thought bed and breakfast establishments were included and I was happy to find that was not the case. The lifeblood of areas like Tramore or Ballybunion in the old days was the bed and breakfast business. There is nothing wrong with reestablishing those businesses. They are better than rows and rows of concrete cottages and apartments. However, that type of accommodation must also be provided. It is an important facility which tourists expect to be available.

My colleague, Deputy Hughes, has made the legitimate point that we cannot penalise somebody who owned the land prior to 1995 and reward somebody who purchased the land since that date. There does not seem to be any justice in that, if I am interpreting the Minister's amendment correctly. I imagine that was not the Minister's intention.

We do not suggest that everybody who bought land since then bought it speculatively but nevertheless people who had land for a long period saw an opportunity to use it, discussed it with the local authority and want to get involved in the development of their local seaside areas should not be penalised in the way in which the Minister's amendment would penalise them.

I agree with my colleagues. The programme has been ongoing for just nine months and people are only getting their act together with regard to discussions and negotiations. In addition, the regulations were not available from the Department of Tourism and Trade until recently. It is premature to cut off this scheme. People may have held negotiations with a planning officer and started to arrange finance, etc. This was a three year programme and there must be a lead-in time if there is to be proper development. The exclusion of self-catering cottages and apartments will cause problems for those who have already paid considerable sums for work by people, such as those in the Minister's former profession, to get their plans together.

I welcome that the Minister has clarified the situation. There was concern in some areas, particularly in Bundoran which I represent, regarding other aspects of the scheme. Given that it was a three year programme, that only nine months have passed and that the regulations were not available until recently, the Minister should reconsider the position. Some people have negotiated with banks and building societies and organised planning matters. Things must be done properly if the scheme is to be addressed. I support my colleague's amendment and ask the Minister to reconsider the matter given the difficulties in which people now find themselves.

We must recognise that the Minister has introduced an ameliorating amendment to the section as drafted. However, as Deputy Hughes pointed out, this does not overcome the difficulties of people who owned land prior to 8 February 1995. They may be in a position to use the ameliorating section if they can prove to the satisfaction of the Revenue Commissioners that they entered discussions with a planning authority. However, it is most unfair to penalise such people as opposed to a developer who bought property and is now in a position to comply with the section.

I readily recognise that the Minister is trying to be helpful by not attempting to catch people who have gone a substantial way in terms of putting forward proposals and bringing them to a conclusion. However, it would not constitute a substantial loss to the Exchequer to further amend the section to cover the issue raised by Deputies Hughes and Coughlan. It does not involve a large number of people and it is possible to redraft the section.

As I said on Committee Stage, we should not lose sight of the purpose for which the seaside resort renewal scheme was introduced, which was to revitalise existing seaside resort towns which had deteriorated over the years. When I was Minister for Tourism and Trade, I often pointed to the example of Tramore where I used to holiday many years ago with my children.

The Deputy was most welcome.

We used to stay in a house there for a week and the hurdy-gurdy and other machines cost a fortune. I also made sure to take in Tramore race week in late August.

The real attraction.

One needed to make a considerable profit on the horses at Tramore to fund the activities of the children. Those type of resorts have deteriorated and when I was lucky enough to be Minister for Tourism and Trade. I envisaged that the renewal scheme would revitalise such areas. On Committee Stage I said that perhaps a more sensible approach would have been to allow the scheme to run for two years. Nobody favours more tax avoidance measures, such as BES and others which it was necessary to close off, but the alternative was to signal that, after 6 April 1997, the tax incentive announced in the 1995 budget would no longer operate.

It is not on to announce a scheme and change it midcourse. As Deputy Coughlan pointed out, it was well into the latter half of 1995 before details of the scheme were available from Departments. Many people may decide in the next two years to build holiday apartments in Clonakilty. This area was included in the scheme during Report Stage of the 1995 Bill but, when I drafted the original scheme, I never envisaged that Clonakilty would be included as a seaside resort.

I saw houses in the middle of the town last week which are flooded during high tide.

I have stayed in Deputy Joe Walsh's house in Emmett Square, Clonakilty. Last year the number of seaside areas was increased and some places were included, but so what if people decide over the next two years to build holiday apartments in Clonakilty? What about it if people want to spend money building apartments in those places? It will revitalise certain towns, which was the purpose of the scheme.

It is not the end of the world.

If people have a holiday apartment or cottage in these places, it will ensure they or others visit throughout the year. There will be an economic spin-off. The Minister has gone some of the way by introducing an ameliorating amendment to try to overcome the problem of investors and others caught by the original provision. However, he could go one step further to overcome the difficulties raised by my colleagues. The possible loss to the Exchequer is not substantial, perhaps as little as £2,000.

I intend to accept Deputy Hughes's amendment, but with some alterations. However, at the end of my amendment, after cottage or apartment, I will not,inter alia, accept Deputy McDowell's proposal regarding “either/or”. I want to accommodate genuine people who, even if they owned land, have engaged in activity in this area. For example, they may have persuaded a parent that they could undertake this development. This could be the case in some circumstances. I am attached to Deputy Hughes's amendment because it is time specific and terminated so that nobody can get in on the provision now.

After the words "cottage or apartment", I wish to insert that this can be supported by way of an affidavit from the said planning authority. The section would then read: "that the said person can prove to the satisfaction of the Revenue Commissioners that a detailed plan had been prepared and that detailed discussions had taken place with the planning authority in relation to the holiday cottage or apartment after 8 February but before 5 April 1996 — the time has passed and nobody can get in now — and that this can be supported by way of an affidavit from the said planning authority."

I appreciate that the Minister has taken my amendment on board.

I wish to have the amendment recommitted.

Bill recommitted in respect of amendment No. 26.

I brought to the Minister's attention the details of what I considered to be a genuine case. By refusing to accept the word "or" instead of "and" the person in the case I brought to the Minister's attention will not be able to avail of this. I think I would be able to satisfy him that detailed plans were prepared but I do not believe I would be able to establish that they were discussed in detail with the planning authority.

If the Minister can assure me that the person I am referring to is all right, that is fine but if I were to lose out having made the running on this, I would regard it as a curious irony to end up being knocked out by an amendment which is accepted at the end of the whole process, considering all the accumulation of special arrangements in favour of Deputy Hughes whom I congratulate on having his amendment accepted.

I support Deputy McDowell. If I understand what the Minister said, by adding the additional wording after the word "apartment", he would also have to delete the words at the beginning of subsection (b), conceding what I would describe as a commencement date.

The person is obliged to have purchased land after that date. I support Deputy Michael McDowell's contention that the word "or" should be used instead of "and" because otherwise there will be hardship cases.

In reply to Deputy McDowell, I am assured that the case, to which he referred and about which he has had discussions with my officials, is covered adequately.

I can relax.

I accept the technical amendment proposed by Deputy Hughes, that is, that the reference to the dates at the outset of that subsection be properly incorporated at the end of subsection (b) rather than at the beginning. If the House will allow and there is a procedure for this — this is the danger of writing law on the hoof; we know what we want and the Clerk and officials will give substance to what we are agreeing, I will incorporate Deputy Hughes's amendment. He suggested that the planning authority substantiate the discussions with an affidavit. If that is acceptable, I propose that amendment to the amendment.

Perhaps the text could be supplied, Minister.

We will supply the text. What we are saying is that the dates to which Deputy Hughes referred will be incorporated in the appropriate place, at the end of that amendment to the effect that this can be supported by way of an affidavit from the said planning authority.

I accept what the Minister said. We must make provision for two situations. The first is that raised by the Minister and incorporated into the original amendment, namely for people who purchased land arising from the last Finance Act after 8 February 1995 or contracted to purchase it——

Yes, and before 5 April.

We must also provide for sons, daughters, families or companies who have been the owners of land for ten or 15 years, land which may be lying undeveloped. Those people, in trying to capitalise on the attractive tax incentives announced in last year's Government initiative, may have had discussions with the planning authority, supported by an affidavit after 8 February 1995 but before 5 April 1996. That is why my amendment requests that if we are deleting "on or after the 8th February, 1995", subsection 5 (b) should read as follows: "but before the 5th day of April, 1996".

All of this is overshadowed by the fact that what the Minister is amending is a minuscule portion of the original package, but it must be acknowledged it was the portion in that package which in the majority of secondary tourism towns released this investment flow which generated revenue for the Exchequer and sheltered tax for those who availed of it. It is overshadowed by the hearing in the High Court at present on what exactly is the definition of a holiday apartment. We are discussing people who apply for planning permission for dwelling houses or apartments but do not state specifically it is for holiday dwellings or apartments.

The decision in the High Court case may not be handed down for months. In fact, as I understand it, this case has been in its preparatory stage and slowly finding its way to the High Court for almost ten years. It is in the interests of many people that this judgment is not issued for several years. In keeping with the way the Minister has handled this matter so far, I suggest the Revenue Commissioners be directed not to fine comb planning permissions which have been granted and make a distinction between a planning application for 20 houses, for example, as against the proper application for 20 holiday homes. Nobody applies for planning permission for holiday homes; they apply for dwelling houses or apartments but they do not add the word "holiday". I am satisfied the Minister will ensure that the spirit of what we have been trying to achieve will not be defeated.

I trust Members have the text of the proposed change. On the situation which is close to the constituency of Dublin South-East, to which Deputy McDowell referred, I suggest, respectfully, that Deputy Hughes quit while he is ahead.

Amendment No. 1 to amendment No. 26 agreed to.

I move amendment No. 2 to amendment No. 26:

In the last line of subsection (5) (b), after "apartment" to insert "on or after the 8th day of February, 1995 but before the 5th day of April, 1996".

Amendment No. 2 to amendment No. 26, by leave, is being amended to include the addition which has been suggested by the Minister, the text of which is "and that this can be supported by way of an affidavit from the said planning authority". Is that satisfactory and agreed?

It is not.

Does that not include the dates?

Does that include 8 February?

It is an addition.

Amendment to amendment No. 2 to amendment No. 26 agreed to.
Amendment No. 2, as amended, to amendment No. 26 agreed to.

The Minister has a technical amendment to amendment No. 26, as amended.

My amendment, by leave, is, in the second last line of subsection (5) (b), to substitute the word "planning" for "local".

Amendment to amendment No. 26, as amended, agreed to.
Amendment No. 26, as amended, agreed to.

I move amendment No. 27:

In page 40, between lines 29 and 30, to insert the following:

"29.—Section 15 (1) (e) (iii) (1) of the Finance Act, 1991 is hereby amended by substituting the following paragraph for paragraph (a):

‘(a) the operation of tourist accommodation facilities for which the Bord maintains a register in accordance with the Tourist Traffic Acts, 1939 to 1987, other than hotels, guest houses and self-catering accommodation, except that Bord Fáilte may at its discretion and subject to criteria agreed with the Minister for Finance, where the characteristics and tourists needs of an area so justify, admit a hotel, guest house or self-catering accommodation as a qualifying tourist undertaking which would obtain the same treatment as a holiday hostel,'.".

I must oppose this amendment.

Amendment put and declared lost.

Amendment No. 28 is in the names of Deputies McCreevy and de Valera. Amendments Nos. 29 and 30 are related. Therefore, amendments Nos. 28, 29 and 30 may be discussed together by agreement. Is that agreed? Agreed.

I move amendment No. 28.

In page 41, line 20, to delete "80 per cent" and substitute "100 per cent."

The move to reduce the proportion of investments from 100 per cent to 80 per cent to our film industry will be detrimental to it. All of us interested in this matter would, of course, first and foremost want to see our indigenous industry growing and prospering. However, it would be foolish to believe that this could be done without the help of the blockbuster movies made in Ireland in the past few years which encourage and bring about an infrastructure on which our indigenous industry can grow. Without that symbiotic arrangement, it would be even more difficult to gain not only the experiences there but to create the infrastructure needed for our film industry.

It is interesting that IBEC proposed a compromise with regard to the proposed reduction of the 100 per cent investment to 80 per cent. It believed that films with a budget under £4 million should be given the full 100 per cent while films with a budget over £4 million should be judged on a case by case basis by the Minister for Arts, Culture and the Gaeltacht.

The uncertainty that has been caused by these proposed changes to what has become known as section 35 has had a negative impact on our film industry, in the last few months in particular. It has already experienced a reduction in production activity for 1996. We have had enough uncertainty on this section as it is. In the beginning, there was a feeling that all comers were welcome. There were then alleged abuses and a feeling that the regime had to become stricter. There is also a perception that the Department of Finance wishes to see major changes to section 35. All this creates uncertainty, which I am sure the Minister will agree is detrimental to investment.

On a number of occasions in this House, I have taken the opportunity to point out that there have already been difficulties in certain respects with our film industry that, unfortunately, have not been addressed in this Bill. I refer particularly to the infamous "Divine Rapture". I said at the time I would like to have seen the Minister making it a condition that any disputes over contracts would be settled in this jurisdiction and the producers of the film required to present a bond which would guarantee all moneys due to Irish workers and suppliers. In the case of that film, the main losers were the people in the local areas who supplied different services, which is why we have the reference in amendment No. 29.

IBEC has already alluded to the fact that with regard to these proposals there is an anomaly whereby the Minister for Arts, Culture and the Gaeltacht may not certify a film as qualifying unless such a certificate has been applied for by budget day. Film companies which raised their finance under section 35 and were still developing their film projects found that their investors had their entitlement to tax relief unilaterally cancelled. IBEC and those on this side of the House would like to see that situation addressed. We also referred to the fact that we would have liked to have seen BES schemes used to assist scriptwriters.

I agree with my colleague on this matter. I have spoken about this issue on every Stage of this debate. The Minister should not have changed section 35; it should have been left as it was for another few years at least.

I smiled when I listened to my colleague outlining IBEC's proposals. I could imagine the Minister for Arts, Culture and the Gaeltacht looking at all films over £40 million and deciding whether they were worthy projects. I do not mean this disrespectfully, but I could imagine him tearing his hair out trying to decide which film should be in and which should be out. It would be an impossible situation.

He would need a "Braveheart" for that.

He would, and he would do the right thing by including every film and giving them all the benefit. It is a harum scarum suggestion from IBEC.

He would fit the demonology theSunday Independent thrust upon him as being censor-in-chief.

It would have enjoyed that.

I do not believe this reduction is going in the right direction. On each occasion when we had this discussion, the Minister talked about the loss and cost to the Exchequer. If we did not have section 35 in the first place, there would not be any of this activity and, therefore, none of this income. It is a mirage to talk about it in terms of a loss to the Exchequer because without this section, as it stands, we would not attract the type of investment involved.

A film like "Braveheart", as well as projecting the image of Ireland's involvement in the film industry and the way in which it can attract and encourage other film producers to come here, is also a tremendous benefit to our tourism industry in general. People will recognise the Curragh plains and Kildare in the film and will want to see it. They may also see particular aspects of Ireland in this film that may not be as obvious in much smaller films, which would not reach a wide audience. It is hard to quantify the real benefit of such a film. I do not accept that the potential costs to the Exchequer are anything like the Minister suggested. Although he has suggested this in good faith, there are many other issues involved. The income to the State and the economy from such a film being produced here is far greater than the suggested artificial loss the Exchequer would suffer by having the original section 35in situ as it was.

I am disappointed that the Minister has not accepted any of our arguments on this section, although he listened to them carefully on both Second and Committee Stage. Although I know the Minister has moved to deal with other issues, as somebody who enjoys a good film and the theatre, I would have liked to have seen this investment running for another few years. I hope the Minister will accept amendment No. 28 in particular.

I regret to inform the House that I am not able to accept the three amendments and I want to discuss them together.

I understand the sentiments underlying Deputy de Valera's contribution, as Fianna Fáil spokesperson for Arts, Culture and the Gaeltacht. However, the change has the full support of the Department of Arts, Culture and the Gaeltacht and its Minister. It is not often that one gets line Departments agreeing to what would be manifestly seen as a deterioration in its financial status coming from the Department of Finance. The Department agrees with the recommendations of the consultant. We can no longer protect the Irish film industry. It must be developed and hardened off, otherwise it will remain permanently very fragile and susceptible to the first wind of change. We cannot have a wholly tax dependent film industry. There was a great tax driven burst of life from the Australian film industry at one stage but as soon as the tax supports were removed the international industry collapsed. We are trying to avoid that experience and learn from it. I am reducing the amount deductible from 100 per cent to 80 per cent and the thresholds associated with that in an attempt to learn from and apply here lessons learned elsewhere. It has the support of those who are in the front line of the Department in question.

Amendment No. 29 was discussed very eloquently by Deputy McDowell on Committee Stage. We cannot impose conditions in this very mobile industry such as that when productions come to Ireland they must enter into bonds to ensure that every bill is paid to every supplier and so on. The ultimate sanction — I am quoting Deputy McDowell — ofcaveat emptor applies. If a supplier has any doubts about the credibility and credit rating of the person looking for goods and services on credit, then he or she should look for cash up front. It behoves the would-be suppliers of those services to satisfy themselves as to their means of redress in relation to debts incurred. For the State to impose in legislation a requirement on the lines suggested by Deputy de Valera in amendment No. 29 would be counterproductive. It would impose a restriction because of the “Divine Rapture” tragedy. Poor cases make bad law. There are other provisions in commerical law and market transactions to which we can have regard.

Amendment No. 30 seeks to remove the requirement that a film is made for bona fide commercial reasons and not as part of a tax avoidance scheme. That provision is included for obvious reasons and I would have thought Deputy McCreevy, given his membership of the accountancy profession, would understand it. That profession is well known for its wonderful creativity with all forms of tax avoidance schemes. It could get into home movies which, through transfer pricing, would cost an enormous sum of money which would be a wonderful tax scam. Benefits have to be restricted to commercial films.

It is evident concessions with other taxpayer's money have to be in respect of a bona fide film and not some scam concocted in the back room of some accountant's office. Accountants will be busy tonight looking at the Report Stage of this legislation to find out where the potential cracks and loopholes are. The Minister for Finance and the Dáil will be back this time next year and the year after closing doors we thought were nailed down, bolted and welded.

As it is now 6.45 p.m., I am required to put the following question, in accordance with an order of the Dáil of this day: "That the amendments set down by the Minister for Finance and not disposed of are hereby made to the Bill; that the Fourth Stage is hereby completed and the Bill is hereby passed."

Question put.
The Dáil divided: Tá, 65; Níl, 52.

  • Ahearn, Theresa.
  • Allen, Bernard.
  • Barrett, Seán.
  • Barry,Peter.
  • Bell, Michael.
  • Bhamjee, Moosajee.
  • Boylan, Andrew.
  • Bhreathnach, Niamh.
  • Bree, Declan.
  • Broughan, Tommy.
  • Browne, John (Carlow-Kilkenny).
  • Bruton, John.
  • Bruton, Richard.
  • Burke, Liam.
  • Burton, Joan.
  • Byrne, Eric.
  • Carey, Donal.
  • Connaughton, Paul.
  • Connor, John.
  • Costello, Joe.
  • Coveney, Hugh.
  • Creed, Michael.
  • Crowley, Frank.
  • Deasy, Austin.
  • Deenihan, Jimmy.
  • De Rossa, Proinsias.
  • Doyle, Avril.
  • Dukes, Alan M.
  • Durkan, Bernard J.
  • Ferris, Michael.
  • Finucane, Michael.
  • Fitzgerald, Brian.
  • Fitzgerald, Eithne.
  • Fitzgerald, Frances.
  • Flaherty, Mary.
  • Flanagan, Charles.
  • Gallagher, Pat.
  • Gilmore, Eamon.
  • Higgins, Jim.
  • Higgins, Michael D.
  • Hogan, Philip.
  • Kenny, Enda.
  • Kenny, Seán.
  • Lowry, Michael.
  • Lynch, Kathleen.
  • McCormack, Pádraic.
  • McGrath, Paul.
  • McManus, Liz.
  • Nealon, Ted.
  • O'Keeffe, Jim.
  • O'Shea, Brian.
  • O'Sullivan, Toddy.
  • Owen, Nora.
  • Penrose, William.
  • Quinn, Ruairí.
  • Ring, Michael.
  • Ryan, John.
  • Ryan, Seán.
  • Shortall, Róisín.
  • Stagg, Emmet.
  • Taylor, Mervyn.
  • Timmins, Godfrey.
  • Upton, Pat.
  • Walsh, Eamon.
  • Yates, Ivan.

Níl

  • Ahern, Bertie.
  • Ahern, Dermot.
  • Ahern, Noel.
  • Andrews, David.
  • Brennan, Matt.
  • Brennan, Séamus.
  • Briscoe, Ben.
  • Browne, John (Wexford).
  • Burke, Raphael P.
  • Byrne, Hugh.
  • Callely, Ivor.
  • Clohessy, Peadar.
  • Connolly, Ger.
  • Coughlan, Mary.
  • Cowen, Brian.
  • Cullen, Martin.
  • de Valera, Síle.
  • Doherty, Seán.
  • Foley, Denis.
  • Geoghegan-Quinn, Máire.
  • Harney, Mary.
  • Haughey, Seán.
  • Hilliard, colm.
  • Hughes, Séamus.
  • Treacy, Noel.
  • Wallace, Dan.
  • Jacob, Joe.
  • Keaveney, Cecilia.
  • Kenneally, Brendan.
  • Keogh, Helen.
  • Killeen, Tony.
  • Kirk, Séamus.
  • Kitt, Michael P.
  • Kitt, Tom.
  • Lawlor, Liam.
  • Martin, Micheál.
  • McCreevy, Charlie.
  • McDaid, James.
  • McDowell, Michael.
  • Molloy, Robert.
  • Morley, P.J.
  • Moynihan, Donal.
  • Nolan, M.J.
  • Ó Cuív, Éamon.
  • O'Dea, Willie.
  • O'Donoghue, John.
  • O'Hanlon, Rory.
  • O'Keeffe, Ned.
  • O'Rourke, Mary.
  • Power, Seán.
  • Wallace, Mary.
  • Woods, Michael.
Tellers: Tá, Deputies B. Fitzgerald and J. Higgins; Níl, Deputies D. Ahern and Callely.
Question declared carried.

This Bill is certified a Money Bill in accordance with Article 22 of the Constitution.