Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

Section 110 was originally designed to give a very strong incentive to the financial services industry at its initial stage in Dublin. The initiative has worked. Now it has been applied, where it was not intended to be applied, to property funds. After consultation with Revenue it was decided to close what was regarded as a loophole or an unintended application of the section.

In closing it the advice was that it could not be closed retrospectively but, by putting forward a fairly detailed amendment, that it could be closed from the date of the publication of that amendment, so we are working forward. How one would measure future revenue flows is difficult to say because, obviously, if one closes a method of applying a particular tax section people will change their behaviour. In any calculation of possible yields one must allow for a change in behaviour. The change in behaviour may be such that it will not be used any more if the amendment is successful.

To get back to the key point, as well as publishing with the intent of signalling to the industry that the section could no longer be used in the way it was used to reduce tax on property portfolios, it is also intended as a consultation document. Therefore, we welcome the comments of the accountancy and tax firms and what they are saying, and we welcome comments by members as well.

I am also aware that there is another set of issues that arise from the funds industry. Work has to be done there as well and further amendments have to be crafted that would be appropriate. The policy intention is that we would be able to maintain it as originally intended for the financial services industry. If there is any abuse there we would certainly tidy it up and focus it more but we would rule it out completely for property. I am open to advice. The Deputy has put a lot of time into this matter and he has contributed very significantly to the public debate on the matter. I appreciate when he said that he did not have the technical expertise. If he gives the pros version of what he thinks should be done to us then I will get my officials to consult with Revenue and talk to the Deputy to see, in the space that is left, whether his version can be designed in a way that is more effective.