Other Questions. - Irish Shipping Sector.

Alan M. Dukes

Question:

7 Mr. Dukes asked the Minister for the Marine and Natural Resources if he will implement the recommendations of the Irish maritime review group; and if he will make a statement on the matter. [17389/01]

I presume that the Deputy is referring to the report made to me prior to last December's budget by the advisory board to the Irish Maritime Development Office, IMDO. The advisory board recognised the need to have in place a competitive package of attractions to make Ireland a centre for shipping and shipping services. Key components of a competitive package identified by the advisory board were a tonnage tax, a modernised ship registration system, an increased seafarer's income tax allowance, speedy development of a new national maritime college and provision for locally based ship financing.

That is exactly to what I was referring.

The IMDO's agenda for the creation of a competitive Irish shipping base has been significantly progressed. Last December's budget saw the special £5,000 seafarer's income tax allowance made more accessible by the reduction in the number of days a seafarer is required to be on a voyage to qualify for the allowance, which is now 161 days as against the previous 169 days. In addition, the 12.5% corporation tax regime for the shipping sector was brought forward from 2003 to 1 January 2001. Progress on undertaking the development of the new National Maritime College at Ringaskiddy, County Cork, as a public private partnership continues. It is planned that the college will be up and running by 2003. Discussions are ongoing between my Department and the Department of Finance in relation to the tonnage tax and seafarers income tax issues. The IMDO is also developing ship financing proposals which I am advised will be finalised shortly.

The IMDO has commissioned consultants to help with the preparation of new and up-to-date ship registration processes. In due course I intend to transfer registration functions for merchant vessels – at present undertaken by the Revenue Commissioners and my Department's Mercantile Marine Office – to the IMDO.

Does the Minister not agree that even the changes in the tax regime – he mentions the proposal for a tonnage tax and the change to the 12.5% tax – still leaves us at a disadvantage compared to other countries? Does he agree that in relation to the seafarers tax, the change that was made by reducing the voyage length from 169 days to 161 days is a meagre response to what was a much more comprehensive proposal? Can the Minister tell the House if consideration has been given to the other part of that proposal which was to increase the seafarers income tax allowance from £5,000 to £15,000? Can the Minister undertake to take any steps, or apply any pressure, towards getting that part of the recommendation implemented in the context of the forthcoming budget?

As a former Minister for Finance, the Deputy will be well aware of the implications of increasing any segments of tax free allowances. That is the difficulty. I agree the change in the number of days, from 169 to 161, is a small improvement. I accept that we are still at a disadvantage, despite the improvement in the budget, compared to other countries who have tonnage taxes. It is my continuing objective to bring about improvements, and to introduce a tonnage tax which will make Ireland a more attractive place for ship registration. There is no doubt the IMDO has done a good job in identifying for my Department and the Government the potential that exists and the disadvantages that we are at. During this year, it will be my objective to bring about these improvements in association with the Minister for Finance.

Could the Minister tell the House when he expects to have the proposals referred to in relation to the provision of ship financing? Is it likely the proposals will be brought forward in time to be considered in the context of the forthcoming budget, to the extent that the budget might include action to forward that system?

I intend to bring forward proposals for Government consideration before the next budget.