Finance Bill 2003: Report Stage (Resumed) and Final Stages.

Debate resumed on amendment No. 12:
In page 26, line 47, to delete "€8,000" and substitute "€9,000".
–(Deputy R. Bruton).

Pursuant to Standing Order 120, I ask that amendment No. 26 to the Finance Bill 2003 be recommitted to the Committee on Finance and the Public Service. We want an opportunity to debate this amendment and, in particular, we want the Minister for Finance to inform the House as to the circumstances in which it was tabled and the identity of those behind it. Who promoted it?

We cannot discuss the contents of the amendment. On the question of recommitting the relevant section of the Bill—

Under Standing Orders, in the event of a section or amendment being introduced on Report Stage which creates a charge on the public revenue or upon the people, the Bill in question may be recommitted in respect of any such section or amendment. The private facility in question is estimated to cost around €30 million which means the cost to the taxpayer in taxes foregone will be at least €10 million.

According to the information available to the Chair, this amendment arises out of Committee Stage proceedings. The House can decide whether it wishes to recommit this section to be debated on Committee Stage in the House.

That is what I am proposing.

Is the Minister opposing the proposal?

We can deal with the amendment when we come to the section.

We will not get to the section.

If Members wish, we can deal with it now.

It is agreed that amendment No. 26 be recommitted.

I presume the time allocated for the debate will be extended.

No, that decision has already been made by the House. The question now arises as to whether the Chair is obliged to take the amendments seriatem. If Members do not want to press their amendments, we can take amendment No. 26 now.

On the procedural issue now before us, the decision of the House is that the amendment is recommitted. I presume the House is now reconstituted as the Committee on Finance and the Public Service.

No, the House has agreed to recommit the section in question to when we reach it. We are about to resume on amendment No. 12. I must take the amendments seriatim. However, if the Members who proposed the amendments preceding amendment No. 26 do not press them, there will, I hope, be time to debate amendment No. 26 when we reach it.

When will the House go into Committee?

When we reach amendment No. 26. If we were to dispose of the preceding amendments—

Most of these amendments are technical and could be disposed of in a few seconds.

On amendment No. 12, is Deputy Ó Caoláin agreeable that we put the question at this stage?

Deputy Richard Bruton tabled the amendment. I was the last person to speak on it. I believe we were discussing amendments Nos. 12 and 13 together.

Amendment put and declared lost.
Amendment No. 13 not moved.

I move amendment No. 14:

In page 40, line 47, after "(d)” to insert “of subsection (1)”.

Amendment agreed to.

I move amendment No. 15:

In page 41, line 1, after "(c)“(iv)” to insert “of subsection (1)”.

Amendment agreed to.

I move amendment No. 16:

In page 41, line 4, after "Paragraph (e)” to insert “of subsection (1)”.

Amendment agreed to.

I move amendment No. 17:

In page 41, to delete lines 9 and 10 and substitute the following:

"(d) subsection (1) (other than paragraphs (b), (c)(i), (c)(ii), (c)(iv), (d) and (e) shall have effect as on and from the passing of this Act.”.

Amendment agreed to.
Amendment No. 18 not moved.

I move amendment No. 19:

In page 41, between lines 12 and 13, to insert the following:

"15.–Section 494 of the Principal Act is hereby amended as follows:

(a) in subsection (2)(a)(II) by the substitution of '€40,000' for '€19,000',

(b) in subsection (4)(b) by the substitution of '24.9 per cent' for '15 per cent'.”.

Is the Minister accepting this amendment? It arose on Committee Stage and he indicated a willingness to make some changes in this area.

No, I do not accept it.

Amendment, by leave, withdrawn.

Amendment No. 20 is in the name of Deputy Bruton. Amendment No. 93 is related. It is necessary to recommit this amendment as it creates a charge on the Exchequer.

Bill recommitted in respect of amendment No. 20:

I move amendment No. 20:

In page 45, line 19, after "relates" to insert ", unless the claim for repayment arises as the result of an error by the Revenue Commissioners in interpreting or in applying the law, in which case the claim can be made within 10 years".

This amendment and the one that follows it deals with a similar issue, namely, the situation where the Revenue have made a clear misinterpretation of the tax law and whether in those circumstances the aggrieved taxpayer should not only get back the money he or she lost but also interest supplements to make good the real value of the money.

This arises acutely in respect of the recent Ombudsman's report which is the subject of my amendment No. 21. The Ombudsman took the exceptional step of reporting directly to these Houses on his experience with the Revenue Commissioners regarding his complaint that a number of widows and a number of other aggrieved taxpayers, including people suffering from serious illnesses, were not being compensated. At the time he drew the attention of the House to the fact that the response of the Revenue Commissioners represented such a misrepresentation of the position, that he considered it a direct and unprecedented challenge to the authority vested in the Office of the Ombudsman by the Oireachtas. The Ombudsman has made this an issue of principle in that he is putting his own reputation and that of his office on the line. We did not make any progress with the Minister on Committee Stage either in terms of legislative change or making arrangements for an ex gratia payment to the individuals involved who were highlighted in the Ombudsman's report.

This is a matter of major importance to the future operation of the Ombudsman's office and we should get a response from the Minister on it. If he is not willing to accept either amendments Nos. 20 or 21, he should at least indicate that an ex gratia payment will be made to a number of these individuals who are not in a strong financial position. One of them, a constituent of mine, is extremely ill and could do with these moneys. These payments have been recommended by the Ombudsman, the highest office that can adjudicate on such issues. I ask the Minister again to at least make a gesture of goodwill, and allow for an ex gratia payment to be made to these people.

In relation to this amendment and the Labour Party's similar amendment, if the story in today's Irish Independent is true, namely, that the Minister is conceding the strenuous arguments put forward by the Opposition on justice for widows and widowers who were refused interest on the taxation, I welcome the Minister's important concession in that regard. I understand Deputy Sean Fleming, the chairman of the Oireachtas Committee on Finance and the Public Service, may have also made representations to the Minister. In the interest of brevity I will conclude my remarks so that we can debate section 20.

I am pleased to speak to this section because our committee had a useful discussion on it. Over the past month or so the Ombudsman and the chairman of the Revenue Commissioners appeared before the committee and we proved there is benefit in having a detailed discussion on these matters. The Minister is giving approval retrospectively to pay the interest based on the consumer price index over recent years so that all those highlighted in the Ombudsman's report will be paid the full interest due in that regard retrospectively. The members of the Oireachtas finance committee can take particular pride in our work over the past month because we have achieved a concrete result here today.

Well done, Sean.

Amendment No. 20 in the name of Deputy Bruton relates to section 17 which we debated fairly extensively in the select committee last week.

Section 17 and other sections provide for a general right to repayment of taxes and duties, subject to a four year claim period. In his amendment, Deputy Bruton is seeking to have a ten year time limit for repayment claims arising out of Revenue misinterpreting or misapplying the law.

I have a number of points on this amendment. As discussed in the select committee last week, allowing unlimited claims where Revenue have been mistaken in interpreting or applying the law could have significant Exchequer risks. There are cases where tax provisions, having been passed by the Oireachtas and assumed to be constitutional, have subsequently been struck down by the courts as being unconstitutional. There were also cases where Revenue operated in good faith but some years after the event the courts decided that Revenue had been applying a mistaken assumption of the law. In providing for a four year time limit on all claims within the general scheme proposed, I felt it was necessary and reasonable to protect the Exchequer in these types of cases. The proposed four year time limit applies not just to income tax but to all taxes and duties other than custom duties.

In recent years it was considered necessary to protect the Exchequer by reducing the time limit for VAT claims from ten to six years. This was because of the perceived magnitude of potential claims for refunds arising from cases taken not just in the Irish courts but in the European Court of Justice which could give rise to a re-interpretation of existing VAT law. In those circumstances, the Deputy's proposal could have serious implications for the Exchequer. It is also important to note that if there are restrictions under the proposed scheme on the rights of the taxpayer to claim repayment, there are similar restrictions on the Revenue Commissioners to look back generally more than four years.

I am satisfied the scheme in section 17 achieves the necessary balance between establishing a fair and uniform system for taxpayers while at the same time providing necessary protection for the Exchequer. It also addresses the issue raised by the Ombudsman about the need for a general scheme. In this regard, I am fortified by the words of the Ombudsman in addressing the Oireachtas Joint Committee on Finance and the Public Service. He stated: "I am pleased to acknowledge the initiative of the Minister for Finance in the context of the Finance Bill which fully meets the third of the three outstanding recommendations". For these reasons I am not prepared to accept Deputy Bruton's amendment.

Amendment No. 93 in my name is related to the report made by the Ombudsman to the Oireachtas last November 2002 entitled Redress for Taxpayers. We had a detailed discussion on Committee Stage about the difficulties in implementing two of the recommendations in this report. The general provisions in the Bill are prospective and represent a balanced approach to providing general rights to repayments and interest while protecting the Exchequer from unquantifiable and unlimited costs. For obvious reasons, it would not be tenable to establish a general retrospective scheme. However, I am mindful of the concerns of Deputies on all sides of the House that even if we take a different approach on what should be the elements of a prospective scheme, the cases raised in the Ombudsman's report should be dealt with. I have given further consideration to these two outstanding recommendations and I have consulted the Attorney General's office on various options.

I propose a solution which is partly legislative and partly administrative and which is strictly confined to the specific cases on which the Ombudsman made recommendations. First, I propose to proceed by way of a legislative solution in respect of the O'Carroll case widows. This amendment will provide the Revenue Commissioners with statutory authority to make payments for loss of purchasing power to those widows. It will permit the Revenue Commissioners to make these payments by reference to the consumer price index, as recommended by the Ombudsman, to all the widows concerned. These payments will be made from the central fund and thus will not be dependent on the size of a Vote or the collection of tax revenue.

Second, the Revenue Commissioners will use the voted funds mechanism to make loss of pur chasing power payments to the much smaller remaining group of ten taxpayers on an ex gratia basis so as to complete the response to the Ombudsman's recommendations.

In coming up with this solution, I have been conscious of the need to protect the Exchequer from the creation of any precedent for further claims.

The payments provided for under the legislative amendment will be made at the discretion of the accounting officer – the chairman of the Revenue Commissioners. I am advised by the chairman of the Revenue Commissioners that he would propose to approve payments in respect of loss of purchasing power to all those widows to whom repayments are being made by reference to the O'Carroll judgment. This will fully meet the Ombudsman's recommendations in relation to these widows.

The payments to be made to the other ten taxpayers by the Revenue Commissioners will be made wholly on an exceptional ex gratia basis to the ten taxpayers concerned and to no others.

In his opening statement to the Oireachtas Joint Committee on Finance and the Public Service on 12 February last, the Ombudsman stressed that "As regards the . . . ten complainants my recommendations apply only to them and do not extend any further". This unequivocal clarification by the Ombudsman is central to the approach being adopted in responding to his recommendations. I hope in responding fully to the recommendations of the Ombudsman and in providing, together with the Revenue Commissioners, for the payments for loss of purchasing power sought by him, I will have the full support of the House in ensuring that this is an exceptional arrangement in these circumstances and will not be used as a precedent.

The recommendations of the Ombudsman will be implemented in full and this will be done by a statutory provision creating a discretionary power in relation to the main group, the widows, and by ex gratia payments by Revenue to the ten other taxpayers specified by the Ombudsman. This is being done on the clear basis of an exceptional arrangement for these cases. I commend the amendment to the House.

The citadel is still safe.

I welcome the change of heart from the Minister, which is at variance with his position on Committee Stage. I congratulate Deputy Fleming on bringing his considerable influence to bear on the Minister and his colleagues. I specifically ask the Minister not to rule out the possibility that other cases will come to the Ombudsman's attention which represent severe hardship. The door should be kept open and if there are other cases we have not yet learnt about we should be able to use the ex gratia system.

I welcome the change of heart of the Minister. While this addresses specific cases it does not address the wider application and the Minister may need to address the legislation which applies to the Ombudsman. The refusal of the Revenue Commissioners to engage with the Ombudsman's office is at the heart of the difficulties surrounding this matter.

It is fine to commend the Minister regarding amendment No. 93 but it would have been an untenable situation had this not been introduced. It was an absolute requirement as the Ombudsman's position would have continued to be undermined if this were not substantively addressed.

Amendment put and declared lost.
Bill reported without amendment.

Amendments Nos. 21 and 23 are out of order.

Amendments Nos. 21 to 23 inclusive, not moved.

I move amendment No. 24:

In page 50, between lines 45 and 46, to insert the following:

"21.–An approved body pursuant to section 848A of the Principal Act shall make available to the public sufficient particulars of its accounts and such other information as may be required by the Revenue Commissioners.".

I move this amendment so that the Minister can give us more details later regarding the tax relief availed of by certain people donating their salaries to charity and the charities claiming the relief back. I will raise that issue separately and I withdraw the amendment.

Amendment, by leave, withdrawn.
Amendment No. 25 not moved.

I move amendment No. 26:

In page 53, between lines 13 and 14, to insert the following:

24.–(1) Section 268 of the Principal Act is amended, in subsection (2A), by substituting the following for paragraph (d) of the definition of ‘qualifying hospital':

‘(d) has the capacity to provide–

(i) out-patient services and accommodation on an overnight basis of not less than 70in-patient beds, or

(ii)day-case and out-patient medical and surgical services and accommodation for such services of not less than 40 beds,'.

(2) This section applies as respects capital expenditure incurred on or after the date of the passing of this Act on the construction (within the meaning of section 270 of the Principal Act) of a building or structure.".

This amendment inserts a new section 24 to include hospitals providing acute hospital services on a day case basis within the scheme of capital allowances which applies in respect of capital expenditure incurred on the construction or refurbishment of buildings used as private health care facilities.

This extension of the tax relief scheme to day hospitals has been devised as a result of a meeting I held last November with certain constituents who then wrote to me about their project. I asked before Christmas that my officials meet the promoters to discuss the detailed provisions of their proposed project. However, this meeting with officials was delayed and did not take place until 24 February, which explains why the provisions have only been included in the Bill now on Report Stage.

To qualify, a day case hospital must provide a minimum of 40 day case beds, outpatient services, operating theatres and on-site diagnostic and therapeutic services. It must also have facilities to provide at least five specialist services, ranging from accident and emergency to oncology and cardiology, etc. While the hospital will provide services to those patients with private health insurance, not less than 20% of the bed capacity must be available for public patients. Moreover, the hospital must provide a discount of at least 10% to the State in respect of the fees to be charged in respect of the treatment of public patients. Fulfilment of the qualifying criteria will be certified by the local area health board.

The capital allowances regime which will apply provides for a seven year write-off period. In other words, allowances of 15% a year will be available for the first six years with the balance of 10% being written off in year seven. The allowances will be subject to a clawback if the building ceases to be a qualifying hospital within ten years. The allowances will be subject to the usual €31,750 limit per annum on the amount of capital allowances which an individual passive investor can set against non-rental income. To conform with EU State aid rules, a day-case hospital will not qualify for the allowances where the relevant interest in the capital expenditure incurred on its construction is held by a company, the trustees of a trust, an individual involved in the operation or management of the hospital as an employee or director, or a property developer. The section will apply in the case of capital expenditure incurred on or after the date of the passing of the Finance Act 2003.

This section is consistent with the tax incentives I have provided for in recent years for the construction and refurbishment of buildings in the health sector. Similar incentives are available in respect of capital expenditure incurred on nursing homes and associated housing units for the aged and infirm, convalescence homes, private hospitals and sports injury clinics. These incentives play a valuable role in taking pressure off the public health system. They encourage the creation of additional capacity in the private sector. In addition, they create an alternative option to treatment in a public hospital, not just for those who can afford to provide for their own health care needs, by offering State agencies an opportunity to secure services for public patients from the private sector at discounted rates.

The amendment proposes to insert a new section 24 into the Bill. The new section 24 amends section 268 of the Taxes Consolidation Act 1997 which provides the meaning of the term "industrial building or structure" for capital allowances purposes. Subsection (1)(j) of that section treats as an industrial building or structure a building or structure in use for the purposes of a trade which consists of the operation or management of a qualifying hospital, as defined in subsection 2A of that section. The definition of qualifying hospital sets out a number of conditions and criteria that must be satisfied if a hospital is to be regarded as a qualifying hospital.

Paragraph (d) of the definition of qualifying hospital is rewritten so as to provide that, in order to be treated as a qualifying hospital for such purposes, a hospital must, inter alia, have the capacity to provide, as it must under the current law, out-patient services and accommodation on an overnight basis of not less than 70 in-patient beds, or, and this is the new measure, day case and out-patient medical and surgical services and accommodation for such services of not less than 40 beds. That is the main change – the condition of 70 beds is reduced to 40 beds in these cases with all the other conditions.

The new measure will allow private day case hospitals with such capacity to be treated as a qualifying hospital for capital allowances purposes, subject to their satisfying all the existing conditions and criteria set out in the definition of qualifying hospital. The new measure will apply in the case of capital expenditure incurred on construction or refurbishment on or after the date of the passing of the Finance Act 2003. The scheme of capital allowances which applies to qualifying hospitals involves: writing-down allowances of 15% per annum – 10% in year seven – in respect of qualifying construction or refurbishment expenditure – section 272(3)(h) of the Taxes Consolidation Act 1997; a seven year writing-down period for the allowances – section 272(4)(i) of that Act refers; and a ten year holding period for the purposes of the avoidance of a balancing charge on disposal – section 274(1)(b)(vi) of that Act refers.

Who are the promoters?

I wish to speak—

I indicated first. Who are the promoters and who did the Department meet on 24 February? Who were the representations from and to what kind of hospital facility is the Minister referring?

Why is the Minister including passive investors in this concession?

The Minister said he was.

I am including the existing schemes, subject to the overall limit of €25,000.

Who is this doctor we heard about?

He is a doctor in my constitu ency. He is an ordinary GP situated in the Naas area whose name was given to Deputy Stagg. He may even be a supporter of the Deputy.

I object to the wording of the question that is being put, that the Bill is hereby passed. We oppose passage of the Bill and ask the Chair to correct the declaration that the Bill is now being passed. That is not the case.

Acting Chairman

As it is now 1.30 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, Report Stage is hereby completed and the Bill is hereby passed."

Ahern, Dermot.Ahern, Michael.Andrews, Barry.Ardagh, Seán.Aylward, Liam.Blaney, Niall.Brady, Johnny.Brady, Martin.Browne, John.Callanan, Joe.Callely, Ivor.Carty, John.Cassidy, Donie.Collins, Michael.Cooper-Flynn, Beverley.Cowen, Brian.Cregan, John.Cullen, Martin.Curran, Valera, Síle.Dempsey, Noel.Dempsey, Tony.Dennehy, John.Devins, Jimmy.Ellis, John.Finneran, Michael.Fitzpatrick, Dermot.Fleming, Seán.Gallagher, Pat The Cope.Glennon, Jim.Grealish, Noel.Hanafin, Mary.Haughey, Seán.Healy-Rae, Jackie.Hoctor, Máire.Keaveney, Cecilia.Kelleher, Billy.Killeen, Tony.

Kirk, Seamus.Kitt, Tom.Lenihan, Brian.Lenihan, Conor.McCreevy, Charlie.McDaid, James.McDowell, Michael.McEllistrim, Thomas.Martin, Micheál.Moloney, John.Moynihan, Donal.Moynihan, Michael.Nolan, M. J.Ó Fearghaíl, Seán.O'Connor, Charlie.O'Dea, Willie.O'Donnell, Liz.O'Donoghue, John.O'Donovan, Denis.O'Flynn, Noel.O'Keeffe, Batt.O'Keeffe, Ned.O'Malley, Fiona.O'Malley, Tim.Parlon, Tom.Power, Seán.Roche, Dick.Ryan, Eoin.Sexton, Mae.Smith, Brendan.Smith, Michael.Treacy, Noel.Wallace, Dan.Wallace, Mary.Walsh, Joe.Wilkinson, Ollie.Woods, Michael.Wright, G. V.


Allen, BernardBoyle, Dan.Breen, James.Breen, Pat.Broughan, Thomas P.Bruton, Richard.Burton, Joan.Connaughton, Paul.Connolly, Paudge.Costello, Joe.Cowley, Jerry.Crawford, Seymour.

Crowe, Seán.Deasy, John.English, Damien.Enright, Olwyn.Ferris, Martin.Gilmore, Eamon.Gogarty, Paul.Gormley, John.Gregory, Tony.Harkin, Marian.Hayes, Tom. Healy, Seamus.

Níl– continued

Higgins, Joe.Higgins, Michael D.Hogan, Phil.Howlin, Brendan.Kehoe, Paul.Kenny, Enda.Lynch, Kathleen.McCormack, Padraic.McGinley, Dinny.McGrath, Finian.McGrath, Paul.McHugh, Paddy.McManus, Liz.Mitchell, Olivia.Morgan, Arthur.Moynihan-Cronin, Breeda.Naughten, Denis.Neville, Dan.Ó Caoláin, Caoimhghín.

Ó Snodaigh, Aengus.O'Dowd, Fergus.O'Keeffe, Jim.O'Shea, Brian.O'Sullivan, Jan.Pattison, Seamus.Penrose, Willie.Quinn, Ruairí.Rabbitte, Pat.Ring, Michael.Ryan, Seán.Sargent, Trevor.Sherlock, Joe.Shortall, Róisín.Stagg, Emmet.Stanton, David.Timmins, Billy.Twomey, Liam.Upton, Mary.

Tellers: Tá: Deputies Hanafin and Kelleher; Níl: Deputies Coveney and Stagg.

Question declared carried.

The Bill, which is certified to be a money Bill in accordance with Article 22.2.1º of the Constitution, will be sent to the Seanad.

Sitting suspended at 1.45 p.m. and resumed at 2.30 p.m.