This section deals with capital allowances for motor vehicles. As I understand it the capital value of a new car is being increased from £14,000 to £15,000 and remains at £10,000 for a secondhand car. Has the Department of Finance conducted an investigation into the whole question of benefit-in-kind which has been revisited on many occasions in the past? Is it proposed to make further changes as it is still a vexed question with sales representatives? The amount of abuse one gets on encountering these people is amazing, it is not directed at the Minister but extends to political parties. Although the changes made have alleviated some of the problems, there are still outstanding problems. If we were to start from a green field situation the Minister might have more scope. Will he indicate if progress has been made?
SECTION 19.
This has been a matter of continuous representation. When I became Minister I met two separate unions representing a number of people directly involved. Given that we had a problem with the definition, I invited them to come back with a definition that ring-fenced and made a distinction between a person who got a company car as part of a salary package and remuneration, drove to work, parked it in a dedicated parking space all day, and drove home, and a person who needed the car as an integral part of his work, like a tool kit. The provision relating to mileage addressed that question. It was brought to my attention that there were people in the greater Dublin area who required a car as part of their job but at the same time were unable to clock up sufficient mileage to get the real benefit-in-kind. Last year we addressed that issue and ring-fenced that category. If representations have been made to the Department of Finance, I am not aware of any — they have not reached the level of intensity that would require them to be brought to my attention. There is a very sophisticated audio-forensic system in the Department which ensures well-pressed representations are brought to my attention and this was not one of them. I am not aware that it has been a matter of contention since last year.
It is only in the past few weeks, since the P60s have been issued, that many of the sales representatives have begun to contact me.
I am sympathetic to ensuring that a person who must have a car as part of his job should not be put at a tax disadvantage as a consequence. There is no problem of principle in this. I have sketched out the broad distinction between a person who has a car as part of a remuneration package and a person who needs it all the time. The difficulty is to get a satisfactory definition that is robost from a tax point of view and is not open to abuse. After two years we found a definition that was satisfactory and went some of the way — in this business one cannot go all the way — and met the concern. If there are additional concerns and if Deputies opposite are in a position to improve the definition to make a distinction between the two, I am open to look at it positively.
I declare a personal interest. I am one of the people who is affected by the £10,000 limit, rather than the £15,000 limit, and it should be increased. As the price of motor cars increases and as the capital value threshold is increased from £14,000 to £15,000 the Minister is saying, in effect, to a person who buys a secondhand car, he must buy a worse car next year to qualify for 100 per cent deductibility. The position of the £10,000 limit is disimproving relative to a new car. It means that instead of being able to buy a two year old car one will have to buy a three year old car to qualify for a 100 per cent tax deduction.
I declare an interest as Minister for Finance. I do not get a percentage reduction on any transaction on a secondhand car because I get VRT etc. on a firsthand car. This is an encouragement to buy new cars.
What about the green document I issued yesterday and commonsense? Is there a huge advantage in persuading me to buy a nippy Japanese vehicle at £15,000 new, rather than a secondhand car?
The net point is the question of raising the allowance for a secondhand car. If we do that it would encourage either the importation of more secondhand cars, which we are not in favour of——
There are people who buy secondhand cars. I am not in the business of encouraging anybody to do anything. It means that relative to a new car people who, in the past, have bought secondhand cars, will have to buy a slightly worse secondhand car to get 100 per cent deductibility. It is not a matter of the interest of the Minister for Finance being affected by it. What the Minister is saying in effect is that in 1997-8 one will only get 100 per cent deductibility on a car which is in a slightly worse condition. If the allowance is being increased for one category I do understand the reason the other should be frozen.
I have many interests in life but motor cars is not one of them. I am not a great driver and do not know one make of car from another, though I might recognise a Mercedes. While I follow motor racing as a sport, I have never been interested in having a better car, perhaps because I did not have one until I was well into my twenties. Most new cars cost in the region of £14,000 to £15,000. I have a secondhand car. Given that the point made by Deputy McDowell is valid, perhaps the Minister will consider it.
There was a time when there was no distinction between new and secondhand cars for capital value purposes. There is a logic to what Deputy McDowell said. Perhaps there should be a pro rata move, the moneys involved are not that great. We will come back to this on Report Stage and give an indication on it. I would like to run a slide-rule over it to see the implications.
Since the Minister does not have a personal interest, he cannot avail of this relief.
In these days of PCs one cannot be too careful.
We do not want a tribunal.
One of the benefits to the Exchequer of selling new rather than secondhand cars is the VRT. What is the overall effect in terms of the balance of payments etc.? What is the overall assessment of the impact of total car sales on the economy?
I presume one could begin to make that argument. We were looking at it in terms of excise revenue.
There is also the SIMI aspect. It seems to be good for the motor trade to sell new cars.
There are environmental, accident and safety arguments in favour of new cars.
I move amendment No. 39:
In page 36, before section 20, to insert the following new section:
"20.—For the purposes of Chapter IV (Urban Renewal Reliefs) of Part I of the Finance Act, 1994 the Minister shall, (in accordance with section 39 of that Act, by order, direct that Gallanstown, Dublin 10 be a designated area.".
I did not work directly on the Dublin West by-election as I was in Donegal North-East but I know the Gallanstown area which Deputy Lawlor is anxious to have classified as a designated area.
As this part of Dublin West comes into Dublin Central I wish to declare an interest on behalf of my constituents.
A renewed interest.
I am familiar with this matter from representations made to me and it is under consideration. The site is not owned by one person and there are other complications. I am examining the matter and may be in a position to come back with an amendment on Report Stage.
I can resubmit the amendment on Report Stage.
Gallanstown is divided by a railway line and I understand that this relates to the industrial part of the area rather than the residential part.
I move amendment No. 40:
In page 36, before section 20, to insert the following new section:
"20.—A capital allowance equivalent to 20% of the initial capital cost of a tractor shall be allowed against the original net capital cost of the tractor for each of the five years following purchase, subject to a prorata reduction in such allowances by the disposal value of the tractor where the tractor is disposed of within a period of 10 years after purchase.".
We have had a substantive debate on enhanced capital allowances for agriculture machinery. In 1992 we aligned all these allowances into 15 per cent over six years, with the balancing 10 per cent in year seven. I do not propose to change this provision.