asked the Minister for Finance if he considers it may be appropriate to create special arrangements for types of investments which enable employees in the public sector and in small and medium-sized undertakings to participate in productive capital formation and which also allows small and medium-sized undertakings the possibility of investment using the investment wage.
Written Answers. - Productive Capital Formation.
60.
Provisions already exist which not only enable but actively encourage employees in small and medium-sized undertakings to participate in productive capital formation. For example the smaller companies market launched by the Stock Exchange in March 1986 is designed to stimulate productive capital formation in such companies. Participation in the smaller companies market does not affect the eligibility of a company for the scheme of relief for investment in corporate trades. Accordingly, an employee of a small or medium-sized eligible company may obtain income tax relief on investment in the company of up to £25,000 in any one year.
Similarly, there is a positive incentive, irrespective of the size of the company for employees to participate through the investment wage concept in a company profit-sharing scheme. Where the terms of such a scheme have been approved by the Revenue Commissioners, shares to a maximum value of £5,000 can be appropriated to each employee in any one year without the employee incurring an income tax charge on the benefit received. The Deputy may be aware that in the recent Finance Bill I increased the attractiveness of the scheme by providing for a reduction from seven to five years in the period for which shares acquired under an approved profit-sharing scheme must be retained to benefit from the full income tax concession.
Another incentive, which I introduced this year, is the Finance Bill provision whereby an employee or full time director of a company can obtain income tax relief on money used to buy ordinary shares in his company up to a total amount of £750.
The question of extending similar facilities to employees in the public sector is more complex. It is difficult to envisage how such employees could participate in productive capital formation in the context of the existing incentive without the implementation of a privatisation programme. I have no plans at present to introduce proposals for the privatisation of State companies.