asked the Minister for Finance the cost to the Exchequer in taxes foregone, of urban renewal incentives in respect of (a) the Custom House Docks area, Dublin 1 and (b) other areas designated for such relief; and if he will make a statement on the matter.
Written Answers. - Costs of Taxes Foregone.
29.
Relief from income tax and corporation tax for investment in urban renewal was introduced by sections 41 to 45 of the Finance Act, 1986.
It is in the nature of this relief that there will be a time-lag between its introduction and the incurring of a cost to the Exchequer. Accordingly, no relief was allowed in the tax year 1986-87 and one claim for relief was allowed in the tax year 1987-88 at an insignificant cost to the Exchequer. The relief allowed did not relate to the Custom House Docks area.
Corresponding figures for the 1988-89 tax year are not available.
30.
asked the Minister for Finance the cost to the Exchequer in taxes foregone of the following corporate reliefs and allowances, for the current year and previous years for which figures are available: (a) export sales relief (b) Shannon relief (c) manufacturing profits reduced rate of tax at the 10 per cent rate (d) stock relief (e) reduced relief for small companies (f) section 84 loans (g) capital allowances accelerated and (h) other business expansion schemes.
The following table sets out the information requested in so far as it is available for the year 1979-80 and subsequent years:
Estimated Cost to the Exchequer.
|
Allowance or relief |
1979-80 |
1980-81 |
1981-82 |
|
£m. |
£m. |
£m. |
|
|
Export sales relief* |
86.0 |
92.9 |
106.1 |
|
“Shannon” relief* |
8.0 |
10.0 |
10.0 |
|
Manufacturing profits — reduced rate of tax** |
— |
— |
NIL |
|
(1981) |
|||
|
Stock relief** |
10.0 |
5.0 |
10.5 |
|
(1979) |
(1980) |
(1981) |
|
|
Reduced rate of corporation tax for small companies** |
5.0 |
5.5 |
7.0 |
|
(1979) |
(1980) |
(1981) |
|
|
“Section 84” loans |
1.7 |
5.0 |
7.9 |
|
(1979) |
(1980) |
(1981) |
|
|
Accelerated capital allowances (corporate sector)** |
52.00 |
62.0 |
72.0 |
|
Investment in corporate trades |
— |
— |
— |
|
Allowance or relief |
1982-83 |
1983-84 |
1984-85 |
1985-86 |
1986-87 |
|
£m. |
£m. |
£m. |
£m. |
£m. |
|
|
Export sales relief* |
96.3 |
301.1 |
194.4 |
422.9 |
377.8 |
|
“Shannon” relief* |
10.5 |
22.0 |
40.2 |
56.8 |
29.0 |
|
Manufacturing profits — reduced rate of tax** |
91.7(1982) |
90.1(1983) |
95.8(1984) |
111.3(1985) |
123.5(1983) |
|
Stock relief** |
12.1 (1982) |
6.5 (1983) |
5.1 (1984) |
7.0 (1985) |
0.4 (1986) |
|
Reduced rate of corporation tax for small companies** |
8.0(1982) |
7.5(1983) |
7.3(1984) |
7.6(1985) |
8.5(1986) |
|
“Section 84” loans |
49.8(1982) |
58.1(1983) |
69.4(1984) |
76.5(1985) |
64.3(1986) |
|
Accelerated capital allowances (corporate sector)** |
89.0 |
95.0 |
96.0 |
110.0 |
105.0 |
|
Investment in corporate trades |
— |
— |
0.9 |
2.0 |
3.4 |
|
Allowance or relief |
1987-88 |
1988-89 |
1989-90 |
|
£m. |
£m. |
£m. |
|
|
(Provisional) |
(Provisional) |
(Provisional) |
|
|
Export sales relief* |
729.2 |
Not available |
Not available |
|
“Shannon” relief* |
116.0 |
Not available |
Not available |
|
Manufacturing profits — reduced rate of tax** |
131.4 |
147.1 |
151.2 |
|
(1987) |
(1988) |
(1989) |
|
|
Stock relief** |
— |
— |
— |
|
Reduced rate of corporation tax for small companies** |
9.0 |
9.5 |
— |
|
(1987) |
(1988) |
||
|
“Section 84” loans |
94.8 |
98.0 |
Not available |
|
Accelerated capital allowances (corporate sector)** |
103.0 |
Not available |
Not available |
|
Investment in corporate trades |
5.6 |
13.6 |
Not available |
**These estimates are very tentative and are subject to a wide margin of error.
*These reliefs are calculated by reference to the 50 per cent rate; otherwise the profits would have been chargeable after 1980 at the 10 per cent rate. .fe
Statistics are not recorded in such a manner as would enable the information requested to be provided in relation to other relevant reliefs and incentives, for example:
—expenditure incurred in mining operations;
—expenditure incurred on acquiring industrial 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;
—expenditure incurred on the acquisition of patent rights and the tax exemption accorded to income arising from the devising of certain patents;
—investment in film making.
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.
In regard to the estimates above relating to the cost to the Exchequer of Export Sales Relief, "Shannon" relief and the reduced rate of tax for manufacturing profits, no account is taken of the fact that without these incentives, many enterprises might not have set up here. To the extent that profits earned by such enterprises would not have been available for Irish tax purposes, part of each cost figure shown might be regarded as notional.
The cost estimates relating to export sales relief and Shannon relief are based on the assumption that the profits involved would have been charged at the standard rate of corporation tax (which was 50 per cent for most of the years in question) were it not for the reliefs. When these reliefs end at 5 April 1990, these profits will become chargeable at the 10 per cent rate where they qualify under the appropriate provisions.
Notes on Table
(1) Export 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.
(2) Manufacturing 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.
(3) Stock relief
Stock relief was not renewed in 1986 for any sector other than farming.
(4) Reduced rate of corporation tax for small companies
The reduced rate of tax was terminated as respects profits and interest arising after 1 April, 1989.
(5) “Section 84” loans
These figures include preference share financing which is a minor element in the total. The figures are gross figures, and do not take account of the yield from the levy on section 84 loan interest which was introduced in 1986. This levy yielded £14.4 million in 1987 and £18.5 million in 1988.
(6) Capital allowances
The cost figure included for each year is estimated by reference to accounting periods ending in the year to 5 April immediately preceding each of the years in question (e.g. year ended 5 April 1979 relates to the column headed 1979-80).
(7) Investment in corporate trades
The relief for investment in corporate trades (Business Expansion Scheme) is an income tax relief available to individuals on investments in qualifying companies.
31.
asked the Minister for Finance if he will give an estimate of the additional tax foregone as a consequence of the use of endowment mortgages as opposed to annuity or conventional mortgages, for the current year and for previous years for which figures are available.
In administering the income tax it is not necessary to distinguish between taxpayers who are buying a house through an annuity mortgage and those who are buying a house through an endowment mortgage.
Because of this, statistics are not recorded in such a manner as would enable the information requested by the Deputy to be provided.
32.
asked the Minister for Finance the cost to the Exchequer in taxes foregone in the following income tax allowances and deductions, for the current year and for previous years for which figures are available: (a) mortgage interest relief (b) medical insurance relief (c) life assurance relief (d) health expenses (e) permanent health insurance (f) retirement annuities and (g) rent allowances; and if he will make a statement on the matter.
The following table sets out the information requested in so far as it is available for the income tax year 1979-80 and subsequent years:
Estimated cost to the exchequer
|
Allowance or relief |
1979-80 |
1980-81 |
1981-82 |
1982-83 |
1983-84 |
1984-85 |
1985-86 |
1986-87 |
1987-88 |
1988-89 |
1989-90 |
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m (provis.) |
£m (provis.) |
£m (provis.) |
|
|
Mortgage interest |
20.0 |
24.0 |
37.0 |
55.0 |
80.0 |
117.0 |
146.2 |
152.0 |
151.6 |
155.4 |
133.1 |
|
Medical insurance |
5.0 |
6.0 |
6.5 |
10.0 |
19.5 |
24.5 |
30.9 |
36.0 |
41.4 |
47.7 |
51.2 |
|
Life assurance |
8.0 |
10.0 |
11.5 |
15.0 |
22.0 |
25.3 |
29.0 |
32.0 |
37.5 |
39.3 |
32.3 |
|
Health expenses (1) |
0.3(1979) |
0.5(1980) |
0.5(1981) |
0.5(1982) |
0.8(1983) |
1.25(1984) |
1.6(1985) |
2.2(1986) |
2.4(1987) |
not available |
not available |
|
Permanent health insurance (2) |
0.1 |
0.3 |
0.3 |
0.2 |
0.2 |
0.2 |
0.3 |
0.7 |
0.7 |
1.1 |
1.2 |
|
Retirement annuities:— self-employed (3) |
not available |
10.0 |
10.5 |
12.6 |
14.3 |
16.2 |
16.3 |
17.7 |
19.0 |
21.0 |
not available |
|
— employees' contributions to approved superannuation schemes (3) |
10.0(1979) |
14.0(1980) |
17.5(1981) |
24.0(1982) |
28.0(1983) |
40.0(1984) |
41.8(1985) |
44.4(1986) |
47.7(1987) |
47.1(1988) |
not available |
|
Rent relief |
— |
— |
— |
— |
0.1 |
0.25 |
0.6 |
0.8 |
1.0 |
1.0 |
1.0 |
Notes
(1) The estimates supplied in the table for health expenses are in respect of the period of 12 months beginning on 1 January in each year.
(2) The cost figures shown for permanent health insurance represent net costs after taking into account the tax payable on benefits.
(3) These estimates are very tentative and are subject to a wide margin of error.
33.
asked the Minister for Finance the cost to the Exchequer in tax foregone for the current year and previous year, of covenants in respect of educational expenses of children and grandchildren over 18 years of age; and the number of such covenants approved for tax purposes.
I am informed by the Revenue Commissioners that statistics are not available which would enable the precise information requested by the Deputy to be given. Such information could not be obtained without undertaking inquiries which could be carried out only at a disproportionate cost.
The latest relevant statistics available are in respect of the income tax years 1988-89 and 1989-90. The following table sets out the available information in respect of all covenants qualifying for tax relief in respect of those years:
|
Year |
Cost to Exchequer |
Number of persons qualifying |
|
£million(provisional) |
(provisional) |
|
|
1988-89 |
16.3 |
22,000 |
|
1989-90 |
19.6 |
27,000 |
These figures relate, apart from some minor categories, to income covenanted to or for the benefit of individuals aged 18 years or over, to universities or colleges in the State for the purpose of enabling them to carry on research or assisting them to teach the natural sciences, and to schools in the State for the purpose of assisting them to teach the natural sciences.