Select Committee on Finance and General Affairs debate -
Wednesday, 23 Apr 1997

SECTION 118.

Mr. Quinn

I move amendment No. 109:

In page 101, subsection (2), line 30, to delete "equal to the amount of the first-mentioned deduction" and substitute the following:

"(in this subsection referred to as ‘the second-mentioned deduction') equal to the amount of the first-mentioned deduction but, as respects a qualifying lease granted on or after the 21st day of April, 1997, where the first-mentioned deduction is on account of rent which is payable by such person to a connected person, such person shall not be entitled in that computation to the second-mentioned deduction".

Amendment agreed to.

Mr. Quinn

I move amendment No. 110:

In page 102, subsection (4), lines 7 to 16, to delete paragraphs (a) and (b) and substitute the following:

(a) in subsection (1), by the substitution of section 49 of the Finance Act, 1995, section 41 of the Finance Act, 1997, or section 118 of the Finance Act, 1997 for ‘or section 49 of the Finance Act, 1995', and

(b) in subsection (2)(a), by the substitution of the following definition for the definition of ‘qualifying premises':

‘"qualifying premises" means a qualifying premises within the meaning of section 45 of the Finance Act, 1986, section 42 of the Finance Act, 1994, section 49 of the Finance Act, 1995, section 41 of the Finance Act, 1997, or section 118 of the Finance Act, 1997.'.".

Amendment agreed to.

Question proposed: "That section 118, as amended, stand part of the Bill."

Mr. M. McDowell

Does it remain necessary to tax drive development in Temple Bar?

Mr. Quinn

We are probably approaching the end of the process.

Mr. M. McDowell

I am surprised that further tax incentives are being given to Temple Bar.

Mr. Quinn

This section does not deal with Temple Bar, it is concerned with pre-consolidation records.

Mr. M. McDowell

I apologise, I thought we were discussing Temple Bar.

Mr. Quinn

We are re-enacting existing tax provisions, not issuing renewals or extensions.

Mr. M. McDowell

We are still dealing with Chapter II. I thought the debate had moved on.

Mr. Quinn

We extended the financial year in respect of the development of the western part of Temple Bar.

Mr. M. McDowell

I thought Chapter II dealt only with Temple Bar. The explanatory memorandum states that it is concerned with that area.

Mr. Quinn

I am informed it consolidates the existing tax provisions. Many of the Temple Bar provisions did not come into play previously.

Mr. M. McDowell

In other words, the section does not extend such provisions.

Mr. Quinn

No.

Acting Chairman

With regard to Deputy McDowell's point about tax driving development in Temple Bar, there is also a need to tax drive development in many small towns throughout the country, some of which enjoy urban renewal status. Tax driving has been a singular success in Dublin but there has been great resistance in the Minister's Department to extending it to other areas. However, towns in the county in which I live have benefited from it. There is an ongoing debate about whether it involves the transferral of funding or investment from one place to another. I was recently informed that the town of Boyle had transferred £2 million in investments to Sligo because development there is tax driven.

I am aware that a working group is investigating this issue and I have no wish to pre-empt its report. However, I hope the group looks favourably on tax driving development in small towns. Most Deputies representing rural areas would agree that towns with populations of between 3,000 to 5,000 do not attract the kind of investment they should in terms of the current economic boom. There is a need to tax drive development in such towns, if only for a short period.

Mr. Quinn

We have already debated this. The Department of the Environment concluded a study on the present generation of urban renewal measures and the quality of evaluation of the outcome which was published in December 1996. The Department and local authorities are to bring proposals forward for the next phase. The Department of Finance's remit is to look at what level of tax we can forego in the macroeconomic context and then to equate that tax loss to every square metre of consumption. That is how we ration it out. My Department does not take a view as to which area should or should not get the tax relief. The process under the urban renewal scheme was that the local authority proposed areas and the Department of the Environment then culled those proposals. In due course the Department of Finance aligned the total floor area proposed with what we felt could be financed over a five year period. Certain guesses and estimates have to be made in relation to that, as happened with the seaside resort proposal that originated in the Department of Tourism and Trade. The original proposals were identified originally by that Department and not by the Department of Finance.

Mr. McCreevy

The original list was not what the Minister for Finance read in the end. I would not have allowed the list to go to 17 if I had been Minister for Tourism and Trade.

Mr. Quinn

The other parties were against the Deputy.

Question put and agreed to.

Sections 119 to 121, inclusive, agreed to.

SECTION 122.

Question proposed: "That section 122 stand part of the Bill."

Mr. M. McDowell

I note there has been consolidation here. Why are we putting maximum sizes on dwellings?

Mr. Quinn

That is on the basis that this is a tax relief to facilitate an owner-occupier. The benefit is to give people an incentive to live in an area. If the area of the property is unlimited, by definition the price is considerably higher.

Mr. M. McDowell

I am unsure of square metres, but I assume they are like square yards.

Mr. Quinn

It is 1,250 square feet.

Mr. M. McDowell

That is big but not huge.

Mr. Quinn

It is very big for an apartment, and this aligns it with stamp duty for first time house purchasers, as a 1,250 square foot house would be a standard three-bedroom semi-detached.

Mr. M. McDowell

That would be a big size for an apartment, although I am against "shoeboxes".

Mr. Quinn

A "shoebox" would be as small as 450 square feet, and this is virtually three times that size.

Question put and agreed to.