Summit holds key to level of tax breaks

Decisions taken at the European summit in Berlin this week will dictate, to a large extent, the level of tax breaks and construction grants that will be made available in Ireland under a variety of urban renewal schemes for the years 2000 to 2006.

Of particular concern to developers will be the reduced incentives provided to the richer part of the country - Dublin, much of the east coast and the Cork, Limerick, Tipperary region - as it loses full Objective I status and moves into a transition period under the Government's proposals for regionalisation. These matters are currently under discussion with the EU Commission.

The resignation of the entire Commission last week may delay negotiations on a more immediate problem: establishing the level of tax reliefs that will be made available for the Customs House Docks Area. This development, the largest construction project in the history of the State, has been undergoing major revisions in recent months in order to take account of planning objections and tax considerations.

In a recent address to the Institute of Taxation, Minister of State at the Department of Finance, Martin Cullen, said that while a capital allowance regime had been successfully secured for the Customs House Docks Area, it would take "some months" for negotiations with the EU Commission on double rent and rates relief to be completed.

"We have a strong case to mount and I believe we will be successful," Mr Cullen said.

Perhaps of greater long-term interest to small-scale investors and developers were Mr Cullen's comments in relation to the Government's plans for regionalisation. The Commission, he said, had "set its face against double rent relief and rates remissions as operating aids and these will not be approved by them in future for areas outside the Article 92(3)(a) region".

Under Article 92(3)(a), regions are known as Objective I regions. And, if the Government has its way, from the end of this year only, the West, Midlands and Border counties will qualify. All other areas: Dublin, Mid-East, Mid-West, South-West and South-East - containing more than 70 per cent of the population - will lose out as an Objective I region in transition.

Mr Cullen commented that Irish officials were actively engaged in discussions with the EU Commission on these State aid issues in the context of the new urban renewal scheme. The intention was to get the business elements of these schemes approved as soon as possible, he said. But it would take time.

New urban renewal schemes were announced by the Department of the Environment in mid-February and 12 county towns fall within the proposed Objective I region. These are: Tuam, Co Galway; Portlaoise, Co Laois; Longford, Co Longford; Drogheda and Dundalk in Co Louth; Ballina in Co Mayo; Monaghan in Co Monaghan; Birr and Tullamore/Clara in Co Offaly; Sligo in Co Sligo and Athlone and Mullingar in Co Westmeath. Three suburban estates in Galway City would also qualify.

New city urban renewal schemes in the richer, Objective I in transition areas are located at Blackpool/Shandon and City Docks in Cork City; Ballymun, HARP, Inchicore/Kilmainham, Liberties/Coombe, north-east inner city and Millennium/O'Connell Street in Dublin; Dun Laoghaire in Dun Laoghaire/Rathdown; Balbriggan and north-west Blanchardstown in Fingal; north Clondalkin and Tallaght in South Dublin; Limerick centre city area and the periphery of the commercial centre in Waterford.

The county towns that qualify are: Carlow; Bandon, Cobh, Mallow, Passage West/Glenbrook in Co Cork; Buncrana in Co Donegal; Tuam in Co Galway; Athy and Kildare in Co Kildare; Kilkenny; Newcastle West in Co Limerick; Navan in Co Meath; Roscrea and Thurles in Tipperary NR; Carrick-on-Suir and Tipperary in Tipperary SR; Dungarvan in Co Waterford; New Ross in Co Wexford and Arklow and Wicklow in Co Wicklow.

The exclusion of Kerry and Clare from the Objective I regionalisation scheme, will mean that Shannon in Co Clare and Tralee in Co Kerry will lose benefit.

The Government has also undertaken to introduce a new scheme of tax incentives aimed at the restoration and conservation of townscapes in smaller towns, including the restoration of old buildings etc which have fallen into dereliction and other improvements which could include the preservation of shop fronts. Developments of an in-fill nature will also qualify in order to restore the streetscapes of smaller towns.

Local authorities will be asked to consider which new towns should benefit from such a scheme and to submit urban townscape plans by August 1st next. Guidelines for the preparation of such plans are currently being drafted by Department of the Environment and the scheme is scheduled to come into effect in the autumn.