No allowance for 1% levy defended
“In the context of a one percent levy, I do not believe the refusal is unreasonable,” he told the Select Committee on Finance and the Public Service.
During committee stage discussion of the Finance Bill, 2008, Deputy Richard Bruton, of Fine Gael, asked the Minister if he would consider capital allowances on investments undertaken to comply with Government requirements.
“Many people make investments to meet various standards set by Government, such as those working in agriculture that have to comply with the nitrates directive, so it is reasonable that the Government should give a break for such investments arising from this levy,” said Deputy Bruton.
Mr Lenihan said: “The amendment proposed by the deputy seeks to grant special treatment to those individuals obliged to invest in capital assets in order to satisfy requirements of a particular sector in which they are trading. That would be contrary to the general thrust of the policy which underpins the income levy and would place certain taxpayers in a preferred position over others. Apart from this, throughout the income tax code there is a fundamental distinction between income and capital. A capital investment generally results in the enhancement of the value of assets, which improves the asset wealth of the business or individual concerned.”
In discussion of the Finance Bill in the Dáil, Mr Lenihan said the tax system already provides relief in respect of such capital investments, allowing the investor to write off against income tax, in full, the relevant cost of the investment over a defined period of time.
“The capital investment referred to by Deputy Bruton can already be claimed against income tax and written off in full over the period of the investment. I fail to see how the one percent levy prejudices the person in question.”
