Brian Cowen (Laois-Offaly, Fianna Fail)

There are clear benefits to all from this initiative. The environment will benefit in terms of a reduction in CO2 emissions. It will enhance security of supply of fuels, and create jobs and outlets for agriculture production. It is estimated that the programme I am announcing could ultimately give rise to hundreds of extra full-time jobs in the State. This new relief will require EU approval as a State aid. I am also extending the VRT relief for hybrid fuel cars to flexible fuel vehicles for a trial period of two years.

Renewable energy grants

To help develop a better focus on renewable energy my colleague, the Minister for Communications, Marine and Natural Resources intends to launch several innovative grant schemes relating to biofuels, combined heat and power, biomass commercial heaters and domestic renewable heat grants. I am allocating up to €65 million to provide support for the implementation of these initiatives in the capital envelope for his Department for the period 2006-10.

Heritage reliefs

I will be providing in the Finance Bill for a new scheme of tax relief for heritage property donated to the proposed heritage trust subject to a cap of €6 million per year on the level of overall relief. This will be modelled on the scheme already applying to gifts of heritage items to certain museums and galleries.

Helping business to develop

I am conscious of the enormous contribution made to our economy by the many small businesses in the State. To help develop business generally, and small business in particular, I am proposing the following measures.

VAT registration thresholds

The VAT registration thresholds for small businesses will be raised in the forthcoming Finance Bill from €25,500 to €27,500 in the case of services and from €51,000 to €55,000 in the case of goods. This will cost €12 million in a full year and remove almost 2,200 businesses from the VAT net.

PAYE-PRSI payment arrangements

The annual tax payment limit below which PAYE and PRSI can be paid on a quarterly, instead of the normal monthly basis, is being raised to €30,000 per year. This will assist 74,000 small firms at a cash flow cost of €102 million to the Exchequer in 2006.

Companies capital duty

I propose to abolish the 0.5% companies capital duty from today at a cost of €16 million in a full year to help firms, particularly those operating in the financial services sector. I will also be making changes in the Finance Bill to assist the leasing sector.

Closure of various tax loopholes

I am closing off two particular loopholes in the tax system relating to capital gains tax and interest relief in groups of companies. Details of these anti-avoidance measures are set out in the summary of budget measures.

Remittance basis of taxation

I propose to end the current arrangements whereby certain non-domiciled employees of non-resident firms can escape a large element of income tax by arranging their affairs so that much of their income from working here is paid outside the State. The ending of this scheme should save the State up to €100 million per year in lost income tax revenue. More importantly, it will place all employees and firms, irrespective of nationality or employer, on the same tax footing when working in the State. Further details are set out in the summary of budgetary measures.

Social finance initiative

Deputies will be aware of this Government's commitment to ensuring that our economic success continues to be mirrored in social and community development. I am encouraged by the initial reaction of the banking community to my invitation to participate in a social finance initiative to enhance the availability of loan finance for social and developmental projects in local communities. I am looking to the banks to contribute both seed funding and their expertise to support the practical delivery of this initiative.

See this speech in context