‘Safety’ of tax-break hospitals questioned

INVESTORS got millions of euro of tax breaks to build private hospitals which may not meet future quality and safety standards, it has emerged.

The Department of Health raised serious questions about the merits of the tax-shelter scheme in a submission to the Commission on Taxation last year. The submission was only published in recent days. In it, the department says some of the hospitals built under the scheme “may prove unable to meet future quality, safety and case volume standards”.

The submission may raise questions as to why the Government allowed the scheme to run for so long.

The scheme was introduced in the 2001 Finance Act and offered capital allowances for the construction or refurbishment of buildings used as private hospitals. It was only abolished in this year’s budget, but by then, investors had profited by millions, because of the extent to which they were able to reduce their tax bills.

The scheme cost the state an estimated €10.6m in tax foregone in 2006 alone, the latest year for which data is available. In 2005, an estimated €3.2m of tax was written off.

In its submission to the commission in June last year, the Department of Health voiced concerns about the scheme’s long-term merits.

“The capital allowances scheme currently in operation does not take account of the quality and safety considerations which are now at the heart of national hospitals policy,” it said.

The department argued that it was necessary to continue the scheme for the hospital co-location project, under which private hospitals are being built on the grounds of a number of public hospitals to free up bed space in the latter.

Otherwise, the scheme should be scrapped, the department said.

“While it is necessary to continue the capital allowances to underpin the co-location initiative as it approaches financial commitment and construction phases ... the existing blanket scheme of capital allowances may lead to a serious misapplication of capital (and result in tax revenue forgone) in respect of some facilities which may prove unable to meet future quality, safety and case volume standards.”

The Health Department had no comment to make at the weekend, but pointed out the Government had pledged to introduce a licensing system for healthcare providers to ensure safety standards are met.