Gerry Adams
Question:268. Deputy Gerry Adams asked the Minister for Finance the actions that have been taken since March 2011 in relation to the legacy property reliefs and his plans to completely abolish these reliefs. [48633/12]
View answerTuesday, 6 November 2012
Questions (268)
Written answers
The Department of Finance conducted an extensive economic impact assessment during the summer and autumn of 2011 relating to “legacy” property-based tax relief schemes. This involved:
- An analysis of all available data from the Revenue Commissioners on claims to date in respect of legacy property reliefs;
- An analysis of Central Bank and financial institution data in respect of mortgage arrears and defaults in the residential buy to let sector
- The production of a detailed consultation paper which presented all preliminary analysis of the data from Revenue Commissioners as well as Department’s own internal economic modelling.
- A six week consultation period was held to enable all interested parties to submit their views. In addition a copy of the consultation paper was provided to all members of the Oireachtas
- The production and publication of a detailed economic model on how a removal of the legacy property reliefs would impact on individuals
- Reviewing and analysing some 750 responses to the consultation paper.
- Detailed analysis of the impact on various investor types and on jobs and business in a number of economic sectors (healthcare, hotels, student accommodation)
The analysis and findings in the final report were reviewed and validated by the Central Expenditure Evaluation Unit (CEEU) of the Department of Public Expenditure and Reform, and by economic consultants Indecon International Economic Consultants.
I published the Economic Impact Assessment Report along with Finance Bill 2012, and a copy of the report can be found on my Department’s tax policy website (http://taxpolicy.gov.ie/ ).
Finance Bill 2012 contained two measures related to property reliefs designed to reduce the ongoing cost of these schemes to the Exchequer and to eliminate it in as short a time as possible.
With effect from 1 January 2012, a USC surcharge will be introduced on all investors with annual gross incomes over €100,000. The surcharge will apply at a rate of 5% on the amount of income sheltered by property reliefs in a given year and will be in addition to any normal USC payable on this income. This USC surcharge will apply to all investors with this level of gross income regardless of whether they invested in Section 23 type investments or accelerated capital allowance schemes.
In addition, investors in accelerated capital allowance schemes will no longer be able to use any capital allowances beyond the tax life of the particular scheme where that tax life ends after 1 January 2015. Where the tax life of a scheme has ended before 1 January 2015 no carry forward of allowances into 2015 will be allowed. The delayed implementation of this measure is designed to give individuals time to adjust to the absence of the carry forward provision.
There are now only two property based tax incentive schemes remaining in the tax code: the Mid-Shannon Corridor Tourism Infrastructure Investment scheme (only 80% of expenditure can qualify in certain areas) and the Qualifying Specialist Palliative Care Units scheme, which was not commenced.
All other such schemes have been terminated, subject to transitional arrangements for certain schemes where projects were already in the pipeline. However, due to their nature these reliefs continue to entail ongoing costs on the Exchequer in terms of tax foregone.