Mervyn Taylor
Ceist:4 Mr. Taylor asked the Minister for Finance the estimated cost, in terms of tax revenue foregone, of the urban renewal scheme; and if he will make a statement on the matter.
Ceisteanna—Questions Oral Answers - Urban Renewal Scheme.
Relief from income tax and corporation tax for investment in urban renewal was introduced by sections 41 to 45 of the Finance Act, 1986. The specific reliefs consist of (1) capital allowances for commercial buildings, (2) a double rent allowance for lessees and (3) an allowance for owner occupiers equal to half of the cost of construction or refurbishment of private dwellings.
It is in the nature of these reliefs that there will be a time-lag between their 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. I am informed by the Revenue Commissioners that corresponding figures for claims in later years are not available.
However, using information supplied by the Department of the Environment on the construction costs of 158 new commercial projects completed at 30 January 1990, the Revenue Commissioners tentatively estimate that, viewed in isolation, the cost over time in tax foregone could ultimately be of the order of £25 million in respect of the capital allowances associated with the construction costs of those projects. This cost will rise as developments currently in progress are completed, and as projects are undertaken in the recently announced newly designated areas.
No information is available on the likely cost of the other elements in the urban renewal package, that is, the double rent allowance and the owner-occupier allowance. Statistics could not be obtained without incurring disproportionate cost.
Is the Minister seriously telling the House that the Government have embarked on a new urban renewal scheme involving 464 acres of land in 13 cities and counties without having estimated the tax loss and foregone as a result of those measures? Is he saying that an estimate of the cost to the taxpayer and the Exchequer has not been prepared?
Is the Deputy suggesting that one can quantify the tax foregone on projects that may not proceed? One must permit projects to proceed before one can quantify what the loss will be.
The Minister must have some estimate.
(Limerick East): The Minister has killed the goose. The scheme has gone too wide.
Is the Minister saying that the Government have gone blind into this project without giving any thought to what is involved? Taking into account that the scheme is so broadly based, it may be that virtually all the development that will take place will be confined to those areas alone at a massive cost to the Exchequer. It should be remembered that that cost will have to be picked up by the taxpayer. Will the Minister explain to taxpayers how some open-ended figure which has not been calculated even in approximate terms will be lost to the Exchequer? Will he explain the implications of that for Exchequer funding over the next three, five and seven years?
The Deputy is living in an unreal world if he thinks that one can put an accurate cost on something that may or may not happen. If one was to interpret the scheme the way he has, every area that has been designated would be developed to its full potential but that has not been the experience to date. Many of the areas that were designated have not been developed. The whole purpose behind this scheme was to get derelict parts of our cities and urban areas improved and encourage people to return to live there. The scheme has been successful in some areas but not in others. New areas have been chosen to try to give an impetus to the scheme. The only reliable estimate available from the Revenue Commissioners so far from the 158 projects which I mentioned in my reply is £25 million approximately. The payoff for the Government, the Exchequer and the taxpayer will come from the number of jobs that can be put on a permanent footing in the areas which have been developed.
I will allow one very brief question as the time is up.
Will the Minister clarify the basis on which the selections were made for the various projects submitted? For example, why was Blanchardstown excluded?
That is a matter for the Minister for the Environment to whom the question should be addressed.
Has the time for these questions expired?
We are just taking the final reply, with the indulgence of the House.
That means we will lose about six minutes for ordinary questions.
Maybe we will be able to compensate for that at the end of Question Time. Ní deireadh an tsaoil fós é. Feicfimid.