Dáil Éireann díospóireacht -
Thursday, 3 Dec 1998

Vol. 497 No. 7

Adjournment Debate. - Tax Reliefs.

Mr. Neville

I ask for a rural tax designation scheme to be extended to County Limerick outside the city environs so that local investment resources are retained in the area and targeted at job creation and population retention initiatives in County Limerick. At present, the county is facing serious decline and the change in Objective One status has created considerable concern within the county.

I appeal to the Minister to examine the proposal which I put forward for the following reasons. The population decline in County Limerick, especially in towns, villages and the open countryside, has been considerable over a number of decades. Towns such as Rathkeale, Newcastlewest, Askeaton, Kilmallock and others have seriously declined. There is a high economic dependency ratio in the county. There is serious dereliction in the towns with many houses unoccupied or derelict, as well as dereliction of houses in the countryside. There is a lack of quality accommodation to either rent or buy in the county. That does not make it attractive for people to move to live in the county. The local infrastructure is poor. The N69 is the main route along the Shannon. There are excellent opportunities for development in Askeaton and for marine development in Foynes, but the condition of access road to those towns is unacceptable. If works are not carried out to improve it, an opportunity will be lost for the county.

There is high unemployment, outward migration and under-employment in small businesses and on farms in the county. The dependency rate on agriculture is high. A total of 62 per cent of those employed in the county are employed in agriculture or in agricultural services. A total of 15,600 people are employed in this sector. There has been a serious decline in agriculture and the reform of the Common Agricultural Policy will have a further impact on services. The best case scenario is that 3,000 of the 15,600 people dependent on agriculture will lose their jobs by the year 2005.

There is a lack of graduate and high skills employment and an under-development of tourism in the region. There is a major lack of enterprise space and there are no advance factories. There is a 200 acre serviced industrial development site in Askeaton, but no factories have moved into it. There is an outflow of capital from the county and a lack of local or inward investment. Granting the county the status of a rural tax designation would have a positive impact.

The positive developments in Limerick City and its hinterland contrast with decline throughout the county. None of the towns in County Limerick has a population in excess of 6,000. Despite perceived prosperity, the mid-west region generated the third worst regional level of average household disposable income in Ireland in 1994 and 1995. Mid-west household incomes dropped by 10 per cent from 1987-94, the highest fall in household income in any region at that time.

Will the Minister examine this proposal and give a positive response to it? The county should be granted the status of a rural tax designation to counteract the changes that may follow the granting of Objective One status to other areas and to halt and reverse the serious decline in agriculture.

Minister of State at the Department of Finance (Mr. Cullen)

In the 1998 Finance Act, the Minister for Finance introduced a pilot rural renewal scheme for the upper Shannon area subject to EU approval in the hope that this would ameliorate the process of decline in the areas covered by the scheme. The area covered by the scheme comprises of all of Counties Leitrim and Longford, north County Roscommon, the western part of County Cavan and a large part of County Sligo.

Since the announcement of the pilot rural renewal scheme in the last budget, the Department of Finance has been inundated with requests on behalf of areas seeking inclusion in it. It has continually been stressed that this is a pilot initiative and it is not possible to designate every part of the country. However, in his budget speech yesterday, the Minister for Finance announced that when EU clearance for the business tax incentives is given he would look at the possibility of extending the pilot rural renewal scheme on a targeted basis to other rural areas. It is not possible to indicate which area or areas will be involved in any extension and Deputies must be mindful that any such extension would also be subject to EU approval.

The difficulties in securing EU approval for various tax incentive schemes should by now be very familiar having been mentioned in several replies by the Minister for Finance to Parliamentary Questions over the past month as well as in a press release last June and in another Adjournment Debate last October. It is a long, arduous and resource consuming process, but as an EU member state it is our duty to fulfil this requirement.

Meanwhile, the rural renewal scheme residential incentive commenced on 1 June as EU Commission approval is not required for residential tax incentives. With regard to the business incentive element of the scheme, the Commission's view is that the double rent relief and the rates remission are operating aids, in other words, they reduce the annual profits of the enterprise for ten years for tax purposes. The Commission contends, in general, that these two reliefs should no longer apply for new projects for ten years because Ireland has moved from a country coming under Article 92(3)(a) of the EU Treaties to one coming under Article 92(3)(c) as a result of the recent very significant improvement in the Irish economy. The relevant Commission officials have so far not objected to the accelerated capital allowances for the constriction or refurbishment of commercial and industrial buildings because these are considered to be investment aids rather than operating aids.

On a more positive note, I am sure Deputies will have welcomed the Minister for Finance's announcement of an extension of the deadlines for various designated schemes in yesterday's budget. This has been done in response to representations received from several parts of the country where certain projects commenced under these schemes could not be completed within the existing timeframes. The present general urban renewal scheme deadline is being extended in the case of residential projects from 31 December 1998 to 30 April 1999 where 50 per cent of the expenditure is incurred by 31 December 1998. The Temple Bar scheme deadline is being extended from 5 April 1999 to 31 December 1999 in the case of residential projects where 50 per cent of the expenditure is incurred by 5 April 1999. The designated seaside resorts scheme deadline is being extended from 30 June 1999 to 31 December 1999 in the case of projects where 50 per cent of the construction expenditure is incurred by 30 June 1999. The designated islands scheme deadline is being extended from 31 July 1999 to 31 December 1999 in the case of projects where 50 per cent of the construction expenditure is incurred by 31 July 1999. The capital allowances for the construction of multi-storey car parks will be continued for a further year from 30 June 1999 to 30 June 2000 in the case of projects located outside the Dublin urban area and the Cork urban area where 15 per cent of the total cost of the project has been incurred by 30 June 1998. The extension of the residential element of the urban renewal scheme and the multi-storey car park scheme will benefit pipeline projects under these schemes in Limerick. I am pleased to announce that these extensions will also impact favourably on my city of Waterford as well as on Tramore and Dungarvan.