Thomas P. Broughan
Question:90 Mr. Broughan asked the Minister for Finance his plans to support biofuels transport initiatives through fiscal and taxation reforms. [29938/05]
View answerThursday, 20 October 2005
Questions (93, 94, 95)
Written answers
Policy in respect of the promotion or development of biofuels is primarily a matter for my colleague, the Minister for Communications, Marine and Natural Resources.
However, I acknowledge that tax can play a role in the promotion of biofuels and in this regard there is the current duty exemption scheme for biofuels, which was introduced by section 50 of the Finance Act 2004, as a limited, pilot scheme. The purpose of the provision was to allow qualified and conditional relief from excise for biofuel used in approved pilot projects for either the production of biofuel or the testing of the technical viability of biofuel for use as a motor fuel. As the Deputy may be aware, it was necessary to obtain approval from the EU Commission as the proposed scheme represented a State aid. Approval was granted in March 2005 and the scheme was subsequently advertised by the Department of Communications, Marine and Natural Resources. Excise relief was granted to successful applicants to the scheme from August 2005 for a total of 16 million litres of fuel.
The number of applications made for relief from excise duty under the pilot scheme clearly indicates that there is a strong interest in developing a biofuels industry in Ireland and I am in discussion with the Minister for Communications, Marine and Natural Resources about possibilities for future support. The possible introduction of a wider scheme of excise relief for biofuels is under active consideration.
Thomas P. Broughan
Question:91 Mr. Broughan asked the Minister for Finance his plans to support business and household renewable energy strategies through fiscal and taxation reforms. [29939/05]
View answerThree tax incentives relating to renewable energy are currently in operation. Investments in companies engaged in renewable energy generation may qualify for the business expansion scheme, BES, tax relief. Individual investors holding a BES equity investment in such companies for a minimum period of five years can benefit from tax relief, at their marginal rate, in respect of investments of up to €31,750 per year. A qualifying company may raise equity capital up to a general maximum of €1 million in the lifetime of the company.
Section 486B corporate tax relief applies to corporate equity investments in certain renewable energy generation projects which are eligible for tax relief in the form of a deduction from a company's profits for its investment in new ordinary shares in a qualifying company. To qualify for this relief, the energy project must be in the solar, wind, hydro or biomass technology categories, and must be approved by the Minister for Communications, Marine and Natural Resources. The relief is capped at the lesser of 50% of the relevant cost of the project or €9.525 million for a single project. Investment by a company or companies is capped at €12.7 million per annum. The shares must be retained for at least five years by the company, otherwise the relief may be withdrawn.
Section 98A of the Finance Act 1999 provides for qualified and conditional relief from mineral oil tax on biofuel essential to approved pilot projects for either the production of biofuel or the testing of the technical viability of biofuel for use as a motor fuel. A total of 16 million litres of biofuel has been approved for this relief in eight pilot projects over a period of two years from August 2005.
In addition, renewable energy equipment in use for the purpose of a trade may also qualify for plant and machinery capital allowances. The cost of providing the plant and machinery is written off over a period of eight years at an annual rate of 12.5%.
Sustainable Energy Ireland, SEI, which is under the aegis of the Department of Communications, Marine and Natural Resources, runs a number of fiscal incentive schemes such as the "house of tomorrow" grant aid scheme. Further information on these schemes may be obtained by contacting SEI or the Department of Communications, Marine and Natural Resources.
Willie Penrose
Question:92 Mr. Penrose asked the Minister for Finance the position of mortgage relief for single parents, who as single parents receive double tax credits, but yet are only permitted to use a single tax credit against mortgage relief; and if in that context such a policy is not helping single parents who are trying to deal with their mortgage and child care payments, together with other normal household expenses; his views on whether this will be amended in budget 2006; and if he will make a statement on the matter. [29949/05]
View answerRelief for interest paid on certain home loans, mortgage interest relief, under section 244 of the Taxes Consolidation Act 1997 is available to individuals in respect of interest paid on loans used by the individuals solely for the purpose of defraying money employed in the purchase, repair, development or improvement of their main residence. The relief is not intended as a support in respect of any other expenses which individuals may incur.
Married couples receive mortgage interest relief that is double that available to single persons and to lone parents who are not married. This position follows on from the Supreme Court decision in Murphy v. the Attorney General, 1980, which held that it was contrary to the Constitution for a married couple to pay more tax than two single persons living together.
With respect to the tax credits, single, separated or widowed persons may be entitled to the one-parent family tax credit in addition to the basic personal tax credit. The combined value of these credits is equivalent to that of the basic personal tax credit for a married person. Through the one-parent tax credit, and the extended standard rate band available to parents who qualify for such credit, the tax code recognises the financial burden involved where a lone parent has responsibility for raising a child or children single-handedly.
However, it should be pointed out that child benefit is the main instrument through which direct financial support is provided to parents in respect of children and this is available whether the parents are single, cohabiting or married. The Government has substantially increased child benefit since coming into office in 1997. Overall expenditure on child benefit has increased by 279% from €506 million in 1997 to an estimated €1,916 million in 2005. I have indicated to the House previously that there is a need to examine pragmatically and practically what can be done in regard to providing child care support to parents. As the Deputy is aware, it is not the practice to comment on proposals, if any, to change tax law in the lead up to the annual budget.