Olwyn Enright
Question:25 Ms Enright asked the Minister for Finance his views on the desirability of capping the aggregate value of special tax reliefs which can be claimed by an individual. [12857/04]
View answerThursday, 6 May 2004
Questions (31, 32)
Enda Kenny
Question:80 Mr. Kenny asked the Minister for Finance his views on the desirability of capping the aggregate value of special tax reliefs which came be claimed by an individual. [12858/04]
View answerWritten answers
I propose to take Questions Nos. 25 and 80 together.
There is no cap on the aggregate value of special tax reliefs which can be claimed by an individual. However, as the Deputies may be aware, in budget 1998 I announced, as and from 3 December 1997, that an annual cap of €31,750 would apply on the amount of capital allowances that an individual passive investor could claim against non-rental income in relation to capital expenditure incurred on certain industrial buildings. Any unrelieved capital allowances can be carried forward for offset against the individual's rental income. Industrial buildings such as factories, docks, hotels, etc., are affected by this provision as well as buildings under the area-based schemes such the urban, rural and town renewal schemes and a range of other schemes such as multi-storey car parks, private hospitals, etc. There is also a cap of €31,750 on the annual amount that can be claimed by individual investors under the business expansion scheme and as well as cap of €31,750 on the maximum annual amount that can be claimed in respect of a qualifying film under the scheme of relief for investment in films. In the case of the latter scheme, this is further restricted as only 80% of total investment is eligible for relief under the scheme.
In my response to the Dáil debate on the Second Stage of the 2004 Finance Bill, I referred to the fact that the special reliefs provide undoubted economic and social benefits. On the other hand, they narrow the tax base, have a cost, and inevitably are used by high earners to reduce their tax bill. A judgment must be made as to whether the advantages outweigh the disadvantages. Imposing an overall cap on the aggregate value of special tax reliefs, other than the caps already applying to specific reliefs, which can be claimed by an individual could undermine the effectiveness of many incentive schemes in providing the economic and social benefits referred to above. However, as I have stated previously, I will be keeping the various tax reliefs under review in the context of annual budgets and Finance Bills.