The Finance Bill brings home the reality of draconian budget

THE nitty-gritty of December’s brutal budget has at last been spelled out in the cold and unwieldy language of the Finance Bill 2010.

The heavy hits were already flagged by Finance Minister Brian Lenihan in his budget speech.

So the bad news for most people is that there were no major changes from the headline items on Budget day.

In general the new measures represent a tidying up exercise on investment procedures and tax treatment.

Moves which have been welcomed by the Irish Taxation Institute.

However, that will be of little use to those householders who have to dig into their pay packets one more time. As a result of the new Finance Bill the public will have to pay VAT – for the first time – to local authorities for services such as on-street parking and waste collection.

Health insurance bills will rise as the controversial health insurance levy, to subsidise the cover of the over-50s, has been increased to €185 a year.

This will add €25 to the premiums of each insured adult in a household and €2 for each child.

The Revenue Commissioners’ powers have been significantly beefed up under the act.

They will get access to the files of NAMA and the toxic debt agency will have to inform Revenue of all eligible bank assets it is taking on.

If NAMA has any evidence or suspicion of an involvement of offshore evasion vehicles in its accounts this has to be passed on.

Stamp duty details will also be shared with the Land Registry for the first time, which will has the potential to give a full picture of house sales prices in Ireland for the first time.

Elsewhere revenue staff will be handed the same power to serve court summons if gardaí are unable to do so.

They will also be able to force companies to hand over information on people who may be avoiding tax. Revenue can ask the Appeals Commissioner to approve a full trawl of accounts of non-banking institutions and trace contractors’ cash which has not been subject to income tax.

It also gets greater powers to crack down on those who seek to escape vehicle registration tax by bringing in foreign cars.

Insurance companies will now be required to tell the tax officials of any foreign registered car which is being insured in Ireland for more than 42 days.

Penalties for excise and customs’ fines jumped 10-fold to €126,970.

And, in what is likely to be an unpopular move on taxi ranks, the taxman will be able to probe information held by the Commission of Taxi Regulation for evidence of evasion.

The Bill does mark a tentative effort to act on the proposals in last year’s Commission on Taxation.

It has resulted in the closure of five loopholes. However the only significant one was the decision to scrap tax relief on service charges, including bin tags, for householders.

This will affect 393,900 people and bring in an extra €21m to Finance’s coffers.

It also makes an effort to bridge the gap between Islamic banking traditions and Irish law.

The main headache before now has been the stipulation in Shari’a law that interest cannot be charged on loans.

The Finance Bill means that if there are any alternative service charges used instead of interest the money will be treated the same as ordinary interest by Irish tax authorities.

The country has been keen to build business relations with the oil-rich Gulf states and this will make deals easier to arrange.

In addition to this there is a host of other technical changes which will soar well over the heads of the vast majority of people who are not investing foreign funds in Ireland, leasing properties or handling tax bills for foreign branches of their businesses.

Likewise efforts to implement European directives and pin down rules for how VAT is charged on goods or services bought over text messages.

The most affected will be large companies selling products to themselves to avoid tax between countries.