Paudge Connolly (Cavan-Monaghan, Independent)

This year's Finance Bill is characterised by anti-avoidance rules as opposed to anti-evasion measures. It is an effort to close the loopholes that accountants are paid to find, but we will see what they come up with during the year.

The Bill is also driven by the necessity for a level playing field for taxation across the EU. The 2004 Act was notable for its measures to make Ireland more attractive as a holding company location. Disposal of share holdings in trading companies in EU countries, or in those countries with which Ireland has a double-tax treaty, were facilitated to such an extent that they merited an exemption from capital gains tax. EU approval for this measure was forthcoming in September 2004, with appropriate adjustments to the share value thresholds backdated to February 2004. This gave an immediate fillip to indigenous industries and multinational companies and significantly increased the attractiveness of Ireland as a business location.

The Bill allows for a broadening of the base of the common contractual fund, which allows for pension assets to be pooled in a tax-transparent structure. It permits a broadening of the products in which the CCF can invest and extends the range of qualifying investors to include all forms of institutional investment. There are considerable cost inefficiencies in maintaining multiple pension schemes and the pooling of assets of a number of pension funds in a single fund can avoid these.

The Bill contains a welcome provision by which taxpayers can receive deductions on pension contributions to any scheme that was established in another EU member state. Other EU nationals who are working in Ireland are also allowed to contribute to an overseas pension plan within the EU. The Bill allows for them to benefit from tax relief at Irish rates in accordance with the EU pensions fund directive which must be implemented by September 2005. In the case of cross-Border pensions, both employers and employees who are located in the Republic of Ireland will receive the usual tax relief subject to annual limits on any contributions made to cross-Border pensions. This is particularly relevant to people who live along the Border and work in the other jurisdiction. It is a positive development and is geared towards the creation of a single EU market for financial services.

I regret that those consumers who switch bank accounts will be penalised for the Government stamp duty. I find it difficult to understand that the banks give blasé excuses why they cannot implement this change. It amounts to double taxation of €10 per annum. The fact that we must wait until January 2006 for this is unacceptable.

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