asked the Minister for Finance the cost or gain to the Exchequer from the implementation of recommendations Nos. 157 and 158 of the Commission on Taxation to the effect that interest on underpayments and over-payments of tax should be at a rate equivalent to the rate charges on personal overdrafts by the associated banks and that a penal rate of interest should only be applied to tax that has not been paid to the Revenue Commissioners after two years from the end of the year of assessment or the finalisation of assessment if later.
Written Answers. - Commission on Taxation Recommendations.
67.
Statistics are not available which would enable a precise estimate of the effect on the Exchequer from implementation of these recommendations to be given. Such information could not be obtained without undertaking inquiries which could be carried out only at a disproportionate cost. However, it is tentatively estimated that the cost to the Exchequer of implementing recommendations number 157 is of the order of £1 million in a full year.
68.
asked the Minister for Finance if he will give costings and savings to the Exchequer from the implementation of each of the recommendations in chapter seven of the Commission on Taxation Report on Incentives.
I am informed by the Revenue Commissioners that they examined these recommendations in detail following the publication of the second report of the Commission on Taxation. To ensure comparability between that analysis and earlier work on the first report of the commission, the measures to which the Deputy refers were costed in 1983-84 terms as shown in the following table.
It is not possible to supply figures for any tax year subsequent to 1983-84 as the Revenue Commissioners would have to divert scarce staff resources from other, more urgent tasks.
There have, of course, been numerous changes in tax law in the period since the Commission on Taxation's second report was prepared. Some of these changes reflect in whole or in part the relevant recommendations of the commission.
For example, capital allowances are now generally allowed on qualifying expenditure net of grants and the recent budget announced improvements consistent with the approach of the commission in tax treatment of cars purchased for business use. Moreover, the reform of capital allowances also announced in the budget will go some way towards meeting the commission's recommendations in this area.
|
Recommendations in Chapter 7 of the Commission on Taxation's Report on Incentives |
Implications for Exchequer in 1983-84 terms |
|
|
Cost |
Yield |
|
|
£m |
£m |
|
|
6.Capital allowances in respect of both new and second-hand machinery and plant should be provided on an indexed basis to write off the cost of the asset to its residual value over its estimated useful life. Residual values and estimated useful lives of assets should be set down in regulations, following consultations between the Revenue Commissioners and the relevant professional bodies. |
9 |
— |
|
7.Capital allowances on lorries and motor vehicles should be given on an indexed basis at a rate sufficient to write off the cost of the assets to their residual values over their estimated useful lives. |
1 |
— |
|
8.The present industrial buildings allowance should be withdrawn and replaced by normal depreciation on an indexed basis. |
Minimal |
— |
|
9.Accelerated capital allowances in respect of hotel buildings should be withdrawn and replaced by normal depreciation on an indexed basis. |
Minimal |
— |
|
10.The farm buildings allowance should be abolished and the expenditure on farm buildings treated in the same way as industrial buildings. |
Minimal |
— |
|
11.The investment allowance in respect of expenditure on new ships should not be restored. Ships should qualify for capital allowances on the same basis as other plant and machinery. |
Minimal |
— |
|
12.Accelerated capital allowances in respect of multi-storey car parks should be withdrawn and such buildings treated in the same way as other commercial buildings. |
Minimal |
— |
|
13.Capital allowances should be provided on an indexed basis for toll roads and bridges, so as to write off the cost of the assets over the period of the agreement between the providers of such facilities and local authorities. |
Minimal |
— |
|
14.Allowances for expenditure on dredging should be sufficient to write off the cost of a dredging operation (on an indexed basis) over its estimated life. |
— |
Minimal |
|
15.Expenditure on research and development should be allowed as a deduction in computing trading income for tax purposes, whether or not related to the trade. |
— |
Minimal |
|
16.Expenditure on the acquisition of patent rights should be allowed in equal annual instalments (on an indexed basis) over the life of the patent. |
— |
Minimal |
|
17.The exemption from tax of certain patent income should be ended. |
— |
Minimal |
|
18.The allowance in respect of expenditure incurred on the construction of moderate cost rented residential accommodation should be discontinued and such accommodation treated in the same way as other rented residential accommodation. |
— |
1 |
|
19.A depletion allowance should be granted (on an indexed basis) which would write off the cost of a quarry to its residual value over its estimated useful life. The allowance could, at the option of the tax-payer, be given either on a straight-line basis or by reference to the rate of extraction. |
— |
Minimal |
|
20.Capital allowances in respect of plant and machinery should in future only be given by reference to the net cost to the promoter, after taking account of any grants received. |
— |
16 |
|
21.Capital allowances should not be given in respect of assets which are not in use for the purposes of a trade or profession. Initial allowances given on the basis of expenditure being incurred should be discontinued. |
— |
Minimal |
Note: The above costings/savings were estimated in consultation with the Commission on Taxation in terms of implementation in 1983/84. They were calculated on the assumptions of
—relief in that year
—by reference to appropriate past basis years and
—normal depreciation rates which were adjusted for inflation in the intervening periods of up to 25 years.