Dáil Éireann debate -
Wednesday, 27 Jan 1999

Vol. 499 No. 1

Written Answers. - Urban Renewal Schemes.

Gay Mitchell

Question:

495 Mr. G. Mitchell asked the Minister for Finance the reason integrated plans for areas of Dublin, such as the Coombe, Inchicore and Kilmainham, are not being implemented; if this is related to difficulty obtaining EU approval for the incentive elements of these packages relating to capital allowances, rent allowances, and rates remission; if difficulties which have arisen relate to a deterioration in relations between the European Commission and the Government; and if he will make a statement on the matter. [1319/99]

Minister for Finance (Mr. McCreevy)

The Irish authorities have not yet received approval from the EU Commission for the new urban renewal scheme. The latest position is that the Commission has raised a series of queries arising from our initial application. A reply is currently being prepared.

I would stress that this is part of the normal process associated with obtaining EU approval and that the procedure may take some time to complete. Any final decision made by the Commission in this context will be announced at the appropriate time.

The EU Commission has recently drawn up revised guidelines for the examination of tax incentives in the context of State aid for all members states. The recent difficulties in obtaining approval for this and other schemes is as a result of the EU Commission's implementation of these new guidelines and of the fact that due to unprecedented economic growth Ireland as a whole is moving from an area covered by Article 92(3)(a) of the EU Treaty to an area covered by Article 92(3)(c) of the Treaty. Article 92(3)(c) allows for a more limited range of tax incentives than Article 92(3)(a) and the Commission has indicated to my Department that it considers double rent relief and rates remission for a 92(3)(c) area as operating aids, in that they lower the taxable income of an enterprise over the ten year period for which these two reliefs apply. The EU commission has also indicated that it is opposed, on State aid grounds, to the granting of operating aids in such areas except for small scale activities or locally based services in areas where physical dereliction is associated with social disadvantage or high unemployment. It is not expected that there will be a problem in regard to the capital allowances. Any delays or difficulties which have arisen are to due Ireland's improved economic position and to developments at EU level of a general nature.