Cowen to review tax incentives

FINANCE Minister Brian Cowen confirmed yesterday his intention to undertake a complete review of the tax incentive schemes currently in operation.

The lack of tax on stallion fees is not part of the remit set out yesterday by the minister who announced his intentions during his first Budget speech in early December 2004.

Both his department and the Revenue Commissioners will examine the merits of schemes ranging from urban renewal to childcare facilities. The full list of breaks to be scrutinised are:

Urban Renewal.

Rural Renewal.

Town Renewal.

Living-over-the Shop.

Multi-Storey Car parks.

Park and Ride.

Student Accommodation.

Third Level Buildings.

Hotels and Holiday Cottages.

Nursing Homes.

Private Hospitals.

Sports Injuries Clinics.

Childcare Facilities.

Countrywide refurbishment schemes.

Two separate studies are to be undertaken before a final decision is taken on the schemes. The first will deal with the four schemes which cover urban renewal and the second study will deal with the property incentive tax schemes.

It is estimated that those tax breaks cost the exchequer roughly €200 million in a given year.

The loss of tax from stallion fees is put at €3 million per annum by comparison with a fee income of €83 million.

The Institute of Chartered Accountants in Ireland (ICAI) has welcomed the review of tax reliefs announced in the 2005 Budget.

ICAI president Terence O’Rourke said the tax relief schemes had generated a lot of discussion and comment, much of which was ill informed.

“From a public policy perspective, we need a full assessment of the costs and benefits that such schemes bring to our economy,” he said.

While such a review may not impact on the decision already taken to end certain reliefs, it will play a critically important part in evaluating what role tax reliefs should play in the pursuit of social policy objectives that will undoubtedly arise in the future.

“We need to be careful about dispensing with a policy tool that has been successful in the past,” he said. The minister has also said the studies will assess whether measures can be introduced to prevent higher earners reduce their tax bills.

The responses to this will be more interesting in so far as the obvious effect of reliefs, in any sector, is to reduce the tax paid by those who invest accordingly, said Mr O’Rourke.

Those calling for an abolition to the schemes should also remember that the individuals involved acted within the system.

They also invested in schemes that were in keeping with policy objectives set out by the Oireachtas, he said.