Lenihan criticised for failing to soften budget blow

FINANCE Minister Brian Lenihan has been criticised for failing to take his chance to amend the emergency budget and ease pressure on low income families.

The opposition said yesterday’s Finance Bill, which will give legal affect to the main aspects of last month’s budget, was a “stubborn” move on behalf of the minister.

The bill, which will have to be debated in the Oireachtas, included measures to ease penalties on businesses paying their taxes late and clarified the system of levies due on redundancy payments.

However, Fine Gael’s Richard Bruton said Mr Lenihan failed to tweak it to alleviate the concerns of low income families and instead continued to favour property developers and the co-located hospitals’ programme.

“Despite the declaration that tax schemes for property development would end, the minister has, in the small print, allowed investors in private hospitals a further four and a half years to undertake these developments.

“This concession could cost taxpayers up to €500 million over the coming years.

“Such a fund could have gone a considerable distance to soften the blow on ordinary families,” he said.

The Finance Bill confirmed clarifications on the mortgage interest relief which will allow the Revenue Commissioners to query homeowners to see if the exemption is permitted.

It also reduced the amount of interest relief allowed on rental properties by 25%. And in terms of the airport tax it exempted facilities that cater for less than 50,000 passengers a year.

And Mr Lenihan restricted the amount of losses property developers can write off against their tax bill.

However, the Labour Party’s finance spokeswoman Joan Burton said this was not a saving given the exposure the State had to these properties, through the bank recapitalisation programme.

She called for the banks to be categorised the same as developers.

“The State may still take a massive hit as banks, facing huge losses on property and development loans, claim tax refunds.

“Even though it is the taxpayer that is bearing the cost of such losses, through the bank guarantee and through the proposed National Assets Management Agency, the minister has chosen not to restrict the banks’ ability to qualify for such refunds,” she said.

The minister’s statement said the Government still expected to borrow 10.75% of GDP this year, despite the European Commission claiming Ireland will need to exceed this.

“[The bill] strikes the difficult balance between the need to show a credible way forward on our structural problems and the need to protect our economy,” he said.

Sinn Féin’s spokesman Arthur Morgan said the bill confirmed the Government’s policy of taxing families to underpin its bailout of the banks.

He called on the Government backbenchers to vote against it when it comes before the Dáil.