CONSUMERS WILL be directly affected by yesterday’s publication of the Finance Bill with increased local authority bills for a range of services and an end to tax relief on bin charges.
Under the terms of the Bill, waste charges, toll road fees and off-street parking costs are expected to rise as a result of the application of VAT to services provided by public bodies.
From July 1st, VAT will apply to a range of services, including landfill and recycling services, as well as leisure facilities. However, education, health, water and passenger transport services remain exempt.
The extension of VAT to local authority charges arises from a decision of the European Court of Justice which found that there was a distortion of competition in Ireland because public bodies did not charge VAT while private operators providing the same services were obliged to do so.
The Finance Bill also ends tax relief on services charges, with the change coming into effect in 2012.
A range of other measures in the Bill, which gives effect to the budget, include winding down mortgage interest relief, although there is an extension until 2018 for its final abolition. Additional powers for the customs authorities aimed at stamping out smuggling are also contained in the Bill along with further powers for the Revenue Commissioners.
The National Asset Management Agency (Nama) will be required to provide the tax authorities with information to ensure property deals are correctly dealt with for tax purposes.
In a statement, Minister for Finance Brian Lenihan said the Bill struck a balance between providing targeted support to enterprise to assist in economic recovery and enhancing the Revenue Commissioners’ ability to carry out their work. “It also ensures that all sectors play their part in stabilising the public finances and thereby restoring domestic and international confidence in our economy.”
The Bill contained details of the domicile levy of €200,000, which is designed to ensure that all wealthy Irish-domiciled individuals who are Irish citizens make a contribution to the State.
It will also give statutory effect to budget decisions such as the carbon tax and VAT reduction, and close a loophole allowing multinationals to maximise profits through the State’s low corporate tax rate.
Furthermore, the Bill provides for a carbon tax on fossil fuels at a rate of €15 per tonne.
Mr Lenihan described taxation measures contained in the Bill as “pro-enterprise”, and said they would put the economy in a position to take advantage of the recovery forecast for the end of the year.
The Bill also provides for the introduction of a statutory scheme to allow judges to pay the pension levy at the same rate as applies throughout the public service.
Fine Gael deputy leader and finance spokesman Richard Bruton said the only effect that ordinary families would see from the Finance Bill would be the new VAT rate on local authority services and the axing of tax relief on bin charges.
“These new taxes may fall hardest on households in Dublin, where VAT will be applied on the East and West Links and on bin charges by local authorities for the first time, costing up to €350 per year for tens of thousands,” said Mr Bruton.
Labour Party finance spokeswoman Joan Burton said the Bill would result in extra hardship for many families and households.
Meanwhile, in a speech to businesspeople in Dublin last night, Taoiseach Brian Cowen urged people to make short-term sacrifices to allow a return to prosperity by 2016.
“We are going to come though it. Recessions end. Are we going be in the best possible position to pick up or are we going to prolong the recession?” he asked.