Lenihan defends delay to curb on tax reliefs

FINANCE BILL:MINISTER FOR Finance Brian Lenihan has defended the effective deferral into next year of the curtailment of tax reliefs on section 23 properties.

The change is contained in the Finance Bill 2011 published yesterday and follows representations made by a variety of business interests.

Delaying the introduction of the proposed curbs on section 23 tax relief will cost €60 million, but the Government says it has introduced a number of compensating measures to raise revenue.

The Bill still proposes to curtail the tax reliefs, as proposed in last December’s Budget, but this is now subject to the carrying out of an economic impact assessment before the changes are introduced.

Mr Lenihan said the Government had decided on this approach in light of the “wide range of concerns that have been expressed by individuals and groups, in particular regarding the effects of the changes on the real economy and on employment”.

He said bringing forward an examination of the proposed changes was “a modest and appropriate response to the high level of concerns expressed and volume of representations received on the issue”.

He added: “This does not dilute the proposed changes and if and when they are commenced they would come into effect from the next tax year.

“This will be a matter for the minister of the day,” he said.

Among those who made representations were the Irish Taxation Institute, Irish Hotels Federation, the Construction Industry Federation, the Irish Property Owners’ Association, the Irish Auctioneers’ and Valuers’ Institute and the Society of Chartered Surveyors.

Labour claimed vested interests had been able to bend the ear of Government Ministers to postpone the changes proposed in the Budget.

The party’s spokeswoman on finance, Joan Burton, called on Mr Lenihan to “come clean” on whether ordinary workers would have to make up the shortfall.

She pointed out that after previous budgets when the Government had commissioned studies, the measures originally proposed were never commenced. “So, it seems that the Fianna Fáil model of announcing reform, commissioning a study and then abandoning the reform seems destined to be repeated for property-based tax reliefs.”

However, Fianna Fáil TD Chris Andrews said the Minister’s decision was a major victory for those affected by the proposed changes and would provide time and space for the right decision to be taken in the future.

Fine Gael has said it will facilitate the speedy passage of the Bill through the Oireachtas, but would also table amendments to provisions it found “objectionable”.

The party’s spokesman on finance Michael Noonan called on the Government to publish a clear timetable for debating the legislation in order to minimise further political instability.

“Now that the Bill has finally been published, we need a definite timeframe in order to get this legislation through the Oireachtas as soon as possible, and allow Ireland to finally vote this Government out of office,” he said.

Mr Noonan said Fine Gael had concerns about many aspects of the Bill, in particular its emphasis on income tax and the way it penalised lower and middle income families.

“However, with the Government on the verge of collapse, and uncertainty about Brian Cowen’s political future growing by the hour, the country nevertheless needs a clear economic framework to start the year,” Mr Noonan said.