Finance Bill set to implement taxation body's proposals

THE FINANCE Bill, to be published tomorrow, is expected to implement some recommendations of the Commission on Taxation report.

The Bill will give statutory effect to budget decisions and make other changes to tax law.

Minister for Finance Brian Lenihan said that he would examine the “curtailment and removal of further reliefs” in the context of the Bill when he delivered his budget speech last December.

This followed his announcement that the minimum tax rate applying to high earners who are part of tax incentive schemes would be increased from 20 to 30 per cent this year.

The Commission on Taxation was established in February 2008 to review the structure, efficiency and appropriateness of the taxation system.

Its report, published in September of last year, made 230 recommendations.

These included the introduction of a property, carbon and water tax, a simplification of the income tax system and the recommendation that social welfare payments should be subject to taxation with exemptions. Separately, the Finance Bill will set out the full details of changes to mortgage interest relief outlined in Mr Lenihan’s budget speech.

He said where entitlement to the relief would expire in 2010 or after, homeowners in negative equity would continue to receive it up to the end of 2017, when it will be abolished entirely.

The Bill will give full details of the Irish domicile levy of €200,000 per annum, aimed at wealthy non-resident Irish individuals, regardless of where they are tax resident.

The measure will be imposed on all Irish nationals and domiciled individuals whose worldwide income exceeds €1 million and whose Irish-located capital is greater than €5 million.

Mr Lenihan also indicated he would bring forward tax changes to “strengthen Ireland’s competitive edge” in the international funds industry.

He said he would explore the recommendations of the Government’s innovation taskforce’s report in the context of the Bill.

In his budget speech, the Minister said he would include a provision in the Bill to facilitate the payment of pension contributions by judges. It emerged last month that over 20 per cent of the State’s judges have yet to make a contribution towards the pension levy, nine months after voluntary arrangements were introduced.

The Revenue Commissioners said 111 of a total of 141 serving judges had paid or made arrangements to make voluntary payments in lieu of the levy.

Meanwhile, the think tank Tasc has warned that the Bill should not be used to keep “zombie hotels” open.

Tasc’s head of policy, Sinéad Pentony, claimed hotel owners could benefit by up to €1.5 billion if the Bill abolished a tax clawback provision to encourage zombie hotels to cease trading.

“The provision in question provides that, if a hotel ceases trading within seven years of its construction, the tax allowances granted will be clawed back,” she said.

“Many of the hotels concerned were built purely to avail of tax breaks. They were unviable from the start, and in many cases are only being kept open by the banks, which are reluctant to realise losses and write off loans granted to hotels with no prospect of recovery.”