Dáil Éireann díospóireacht -
Thursday, 10 Mar 1988

Vol. 378 No. 11

Written Answers. - Revenue Loss on Tax Relief.

41.

Mr. McDowell

asked the Minister for Finance the amount of tax revenue deemed to have been foregone under the tax reliefs available to investors, including those available to employees investing in their own companies, in each of the years from 1980 to 1987 inclusive.

Minister for Finance (Mr. MacSharry)

The following table sets out the information requested insofar as it is available.

Tax Reliefs available to individuals as investors and the estimated costs to the Exchequer of those reliefs.

Allowance or Relief	1980-81	1981-82	1982-83	1983-84	1984-85	1985-86	1986-87
	£million	£million	£million	£million	£million	£million	£million
Investment in corporate trades (Chapter III of Part I of the Finance Act, 1984, as amended)	—	—	—	—	0.9	2.0	3.4
Investment in research and development (Chapter III of Part I of the Finance Act, 1986)	—	—	—	—	—	—	Nil
Exemption of certain patent income (Section 34 of the Finance Act, 1973, as amended)	Not available	Not available	Not available	Not available	Not available	Not available	Not available
Exemption in respect of dividend income derived from profits which qualify for the 10 per cent rate of corporation tax. (Section 14 of the Finance Act, 1986)	—	—	—	—	—	—	Negligible
New shares purchased on issue by employees (Section 12 of the Finance Act, 1986)	—	—	—	—	—	—	0.3
Interest on money borrowed by an individual in acquiring an interest in a company (Section 34 of the Finance Act, 1974, and Section 8 of the Finance Act, 1978, as amended)	Not available	Not available	Not available	Not available	Not available	Not available	Not available
Profit sharing schemes—exemption in respect of shares granted by companies to employees under approved schemes (Chapter IX of the Finance Act, 1982, as amended)	—	—	—	0.75	1.25	3.5	2.6
Share option schemes — exemption granted in respect of shares granted by companies to employees under approved schemes (Section 10 of the Finance Act, 1986)	—	—	—	—	—	—	Negligible
Special low rate of capital gains tax (30 per cent)
(i) on the disposal of shares in the newly established Smaller Companies Market of the Irish Stock Exchange and
(ii) disposals of ordinary shares in companies which have raised equity capital under the scheme of investment in corporate trades or the scheme of investment in research and development (Sections 60 and 61 of the Finance Act, 1986)	—	—	—	—	—	—	Not available

42.

Mr. McDowell

asked the Minister for Finance the total value of tax reliefs available to industry, and availed of in the years 1980 to 1987, including the amounts of tax revenues deemed to be foregone under each type of relief for those years; and if he will make a statement on the matter.

Minister for Finance (Mr. MacSharry)

The following table sets out the information requested in so far as it is available.

Statistics are not recorded in such a manner as would enable the information requested by the Deputy to be provided in relation to other reliefs and incentives, for example: expenditure incurred in mining operations; expenditure incurred on acquiring industry know-how; payments to an Irish university or other qualifying educational establishment to enable it to undertake research in, or engage in the teaching of, industrial relations, marketing or any other approved subject; expenditure incurred by a trader on scientific research; certain expenditure incurred on recruiting and training of local staff; and expenditure incurred on the acquisition of patent rights and the tax exemption accorded to income arising from the devising of certain patents.

Such information either could not be obtained or could not be obtained without undertaking inquiries which could be carried out only at a disproportionate cost.

Estimated Cost to the Exchequer

Allowance or Relief	1980-81	1981-82	1982-83	1983-84	1984-85	1985-86	1986-87
	£m	£m	£m	£m	£m	£m	£m
Capital allowances*¹	116.6	143.1	183.7	218.2	244.0	284.5	310.0
Export sales relief²	92.9	106.1	96.3	301.1	194.4	422.9	377.8
“Shannon” relief²	10.0	10.0	10.5	22.0	40.2	56.8	29.0
Manufacturing profits — reduced rate of tax*³	—	Nil	91.7	90.1	95.8	111.3	123.5
	(1981)	(1982)	(1983)	(1984)	(1985)	(1986)
Stock relief* 4	9.1	11.4	13.5	10.5	9.3	11.0	1.5
(1980)	(1981)	(1982)	(1983)	(1984)	(1985)	(1986)
Reduced rate of corporation tax for small companies*	5.5	7.0	8.0	7.5	7.3	7.6	8.5
(1980)	(1981)	(1982)	(1983)	(1984)	(1985)	(1986)
“Section 84” loans 5	5.0	7.9	49.8	58.1	69.4	76.5	64.3
(1980)	(1981)	(1982)	(1983)	(1984)	(1985)	(1986)
Urban renewal 6	—	—	—	—	—	—	Nil

*These estimates are very tentative and are subject to a wide margin of error.

¹Capital allowances

The figures shown relate to the cost of the relief granted to companies and self-employed individuals. The cost included for companies is by reference to accounting periods ending in the year ended 5 April immediately preceding each of the years in question, e.g. year ended 5 April 1980 relates to the column headed 1980-81 (6-4-1980 to 5-4-1981).

²Export sales relief and "Shannon" relief

The figures for each year include the tax relief relevant to accounting periods which ended in that year and to earlier accounting periods in so far as such relief was allowed in that year.

³Manufacturing profits

These figures represent the estimated loss to the Exchequer arising from the charging of manufacturing and other qualifying profits at reduced rates of corporation tax instead of at normal rates.

4 Stock relief

The figures shown relate to the cost of the relief granted to companies and self-employed individuals. Stock relief was not renewed in 1986 for any sector other than farming.

5 "Section 84" loans

These figures include preference share financing which is a minor element in the total.

6 Urban Renewal

Relief from income tax and corporation tax was introduced under Chapter V of the Finance Act, 1986, to promote urban renewal and development in certain areas.