I propose to share time with Deputies Wade, Browne, McGuinness and Ryan. Last week I spoke about the broad effects of the Finance Bill. I now wish to concentrate on two issues of concern to me.
With regard to the capital allowance section of the Bill, the lower limit of £25,000 as a proposed threshold is too low and mechanisms should be found to encourage and promote investment. The Minister should consider putting in place a limit of £75,000. That figure may not be acceptable but, during the debate on Committee Stage, I hope the Minister may be convinced to allow the continuation of funding by private individuals of developments and investments through the availability of capital allowances. I hope he will increase the limit.
Of greater interest to me is the current Revenue practice of limiting to 12 or 13 the number of persons interested in forming a consortium to finance developments. There should be no upper limit on the number of those who may become involved in such a scheme. This is further highlighted by the reduction of the lower limit to £25,000 which will make it almost impossible to fund reasonably sized or large projects using the medium of capital allowances to encourage people to invest.
With regard to the urban renewal scheme, I echo sentiments welcoming a further scheme which will prove useful in respect of the renewal of cities and towns and encourage further investment in city areas by individuals. Renewed and refurbished property which is sold to first-time buyers should be exempt from stamp duty. This would allow it to compete with new housing on an equal footing. Where major refurbishment of such properties has occurred, I suggest that proportionate value be placed between the cost price of the property and the cost of refurbishment. A definitive line can then be drawn and the uncertainty in respect of allowances removed.
Three years is too short a period from the time of designation to the assembly of a site, to the application and receipt of planning permission, to the construction stage and finally to the occupation of a premises. This has been highlighted by previous urban renewal schemes where time extensions have always been required. While I do not oppose the use of extensions to prompt people to act quickly, it is unreasonable to have too short a period initially. This Bill acts as a deterrent to the accumulation of sites mid-way through the scheme when the period would have commenced and the time remaining would be too short for the completion of a project. That militates against the success of an urban renewal scheme. Consideration should be given to allowing for a form of registration by the participants in the urban renewal scheme to show their intent at an early stage. When they complete their projects they should then qualify for a period of three years from the registration. This would be better than putting a scheme in place that limited a particular project to a three year period. I will elaborate on this idea to the Minister by way of submission.
With regard to capital gains tax and development land, I understand the Minister's intention to retain the 40 per cent rate for development land while reducing the rate to 20 per cent for other capital gains on buildings, etc. However, I sympathise with the observations of the Construction Industry Federation. It militates against the supply of building land suitable for development in that the proposed vendor will value his land at 60 per cent, which is the sum he will retain. This will keep the cost of development land high and, as we know, this will be passed on to house purchasers.
The reduction by the Minister from 40 per cent to 20 per cent in other categories will stimulate the economy greatly and will be seen as a positive move, particularly in the property market.