Brendan Smith
Question:16 Mr. B. Smith asked the Minister for Finance the progress on the rural renewal scheme; and if he will make a statement on the matter. [16123/99]
Written Answers. - Rural Renewal Scheme.
Brendan Smith
Question:18 Mr. B. Smith asked the Minister for Finance when the business elements of the rural renewal scheme will come into operation; and if he will make a statement on the matter. [16122/99]
I propose to take Questions Nos. 16 and 18 together.
As I announced yesterday, 23 June 1999, these reliefs will come into operation shortly following EU Commission clearance. The tax incentives in question are accelerated capital allowances for the construction or refurbishment of commercial or industrial buildings.
The tax incentives for the rural renewal scheme were legislated for in the 1998 Finance Act. The residential incentives in the scheme were commenced on 1 June 1998 in the case of rented accommodation and on 6 April 1999 in the case of owner-occupied accommodation. The delay in bringing the business tax incentives of the scheme into operation until now was due to the need to clear these under the State aid rules with the European Commission. Because of the longer than expected negotiations and the resultant delay in commencement it is proposed to extend the termination date for the scheme to 31 December 2002 for both the residential and business tax incentives.
As regards the business tax incentives available under the scheme, the capital allowances will apply for qualifying expenditure incurred in the period from 1 July 1999 to 31 December 2002. The year one capital allowances will be 50 per cent for both owner-occupiers and lessors of the buildings constructed or refurbished under the scheme, with the remaining 50 per cent being written off at 4 per cent per annum over the next 13 years. The necessary commencement order will be made as soon as possible and the other necessary legislative changes will be included in the next Finance Bill with retrospective effect to 1 July 1999.
The EU Commission opposed the granting of double rent and rates reliefs for this and other schemes as originally intended. Consequently, the 1998 Urban Renewal Act has already provided for a doubling of the capital allowances for commercial buildings from 50 per cent to 100 per cent for both the rural renewal and the new urban renewal schemes. The position therefore is that neither double rent relief nor rates relief will apply under the scheme. However, it should be pointed out that the doubling of the capital allowances from 50 per cent to 100 per cent for commercial buildings will serve as a major replacement incentive and will be particularly important for owner-occupied businesses which is the main type of firm in the area concerned.