Dáil Éireann debate -
Tuesday, 2 Mar 1999

Vol. 501 No. 3

Written Answers. - Tax Incentive Schemes.

Joe Higgins

Question:

208 Mr. Higgins (Dublin West) asked the Minister for Finance the aspects of the rural regeneration tax incentive scheme the European Commission approved to date; the aspects of the scheme the Commission is investigating before granting permission; the aspects of the scheme the Government has allowed to go forward in the absence of Commission approval; the aspects of the scheme the Government considers not to need the approval of the Commission; the amount of tax forgone under the designated seaside resorts scheme; the amount of the additional cost of the extension of deadlines for various designated area schemes detailed by him in his budget speech as £9.5 million related to the designated seaside resort scheme. [5775/99]

Minister for Finance (Mr. McCreevy)

The EU Commission has not yet approved any aspects of the pilot rural renewal scheme. The business elements of the scheme were formally notified to the EU Commission on 17 September 1998 as EU Commission approval is needed for these elements i.e. capital allowances and double rent relief. The latest position is that the Commission has written to us with several queries arising from our initial application. The reply to them is currently being prepared. Some of the questions are of a standard nature relating to the types of enterprises that may be permitted under EU state aids rules. Other questions relate to the interaction of operating aid with the new regional aid guidelines published by the Commission, including the link between the nature of the handicaps addressed by the operating aid and the nature of the aid. There are further questions about aid intensity ceilings. It will be necessary to have further discussions between my Department and the Departments of the Environment and Local Government and Enterprise, Trade and Employment before finalising the Irish response to all the questions.

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. EU Commission approval is not needed for the residential elements of the rural renewal scheme and the reliefs for the rented residential accommodation under the scheme commenced on 1 June 1998. In addition, I have made provision in section 41 of the 1999 Finance Bill for the introduction of owner-occupier reliefs under the rural renewal scheme for expenditure incurred after 6 April 1999 in the construction, conversion and refurbishment of qualifying residential property.

The Revenue Commissioners have informed me that the estimated qualifying expenditure under the seaside resort scheme is of the order of £250 million with a potential cost to the Exchequer of the order of £110 million. These figures are based on a survey of tax districts in which eight of the main qualifying areas are located. This estimate of costs reflects not only the cost incurred on foot of claims allowed to date but also the residual cost over future years arising from these claims as well as projects that are either not yet completed or not yet commenced.

In my budget speech I announced extensions to the multi-storey car park scheme for projects located outside the Dublin and Cork metropolitan areas, the designated islands scheme, the residential elements of both the 1994 urban renewal scheme and Temple Bar scheme and the seaside resort scheme. I also stated that the estimated cost of all these extensions would be £3.5 million in 1999 and £6 million in 2000. These estimated cost figures were based on the number of projects that my Department was informed would qualify under the proposed extensions. In the case of the seaside resort scheme, it appears that due to amendments in the scheme proposed since the budget and an increase in the take up of the scheme, the original estimate of the potential cost of the extension will have to be revised significantly upwards. However, it is not possible at this stage to indicate what the revised cost will be.