Jimmy Deenihan (Kerry North, Fine Gael)

I am delighted to have an opportunity to speak on the Finance Bill. Deputy Finneran referred to small farmers whom the Government has done more to encourage to leave the land than any previous Administration. The Government has taken hope away from the agricultural community to the extent that in most cases farming is now a secondary career option. The Bill will do nothing to stem the flow of young and old from the land which we are witnessing.

As regards Deputy Peter Power's remarks, all our party leader, Deputy Kenny, and Deputy Bruton are seeking is a cost-benefit analysis of schemes. When in government, Fine Gael and the Labour Party introduced the urban renewal scheme that changed the face of Limerick, Cork and the Dublin docklands. Subsequently, the scheme was rolled out to other provincial centres by the Fianna Fáil led Government and it certainly had an effect on the economy of such areas. Nonetheless, we are calling for a cost-benefit analysis and evaluation of schemes.

As a Minister, Deputy Kenny introduced the seaside renewal scheme which was very successful in some places but never properly evaluated. That is what has occurred recently and that is all we are seeking. As I have said on a number of occasions, I am in favour of targeted tax incentive schemes, which is the only way to secure development into many parts of the country. There is a disparity between east and west which is growing every day. I am convinced that more building occurs in Dublin in one day than in an entire year in County Kerry. The level of activity in places such as County Kerry and along the west coast, including the Minister of State's constituency of County Donegal, is minuscule compared to what is happening on the east coast, especially in Dublin. There are two economies in the country which are evolving at different speeds. Unless the Government provides incentives to invest along the western seaboard and other areas not experiencing the same economic growth as the east, we will have greater division. Future tax breaks will have to be targeted, evaluated and monitored closely to this end. The main problem is that people have become careless about tax breaks. Deputies Kenny, Bruton, Burton and others have questioned why such schemes were rolled out and extended without being properly monitored. There is no doubt they have led to increased economic activity but they must be re-examined from a cost-benefit viewpoint.

I wish to refer to some of the areas for which I have responsibility as party spokesperson. I welcome the provisions in the Bill concerning the film industry. The qualifying budget for a film will now be €35 million — an increase from €15 million. In 2003 the Irish film industry directly employed approximately 3,400 people — technicians, beauticians, including hair stylists, and many others involved in ordinary jobs. There was a major fall-off in production last year, however, with only one film of any significance. On his return from America, the Minister made much noise over that film, "Lassie", and was photographed on television with the dog. Lassie was all that barked last summer because no other major films were made here.

During the years we had blockbuster films made in Ireland but that activity has now moved elsewhere. People have gone off and taken other jobs. The structural base that produced such films here has been dismantled. I hope, however, we will attract some films on foot of the Bill's provisions. For example, yesterday's newspapers reported that this summer the actor Jonathan Rhys Meyers who is in Dublin at the moment will be involved in filming a new eight-part film series entitled "The Tudors". While that is welcome news, there is not much more happening in the Irish film sector.

I would like the Minister's officials to note that there is still uncertainty about section 481 which has been extended to the end of 2008 but, typically, a major film has a lead-in period of one year. Next year is not far away and unless there is certainty about that provision, it will cause difficulties. The Minister should make a statement clarifying what will happen regarding the extension of section 481, otherwise there will be uncertainty. Some films may be shot here in 2007 but there will be major concerns about 2008 since the Minister has said the provision will be terminated then.

I remind the Minister that some British newspapers have reported that major incentives are to be introduced soon for the UK film industry. When the UK lost "Braveheart" to Ireland, that country became aware of our tax incentives. At the time I met members of a committee from the House of Commons who had come here to examine our incentives and discover why we were so successful in attracting film projects. As a result, the UK authorities improved their incentives which will be improved still further in April. They will be a lot more attractive than those contained in the budget here. The film sector, therefore, is becoming very competitive.

I thought the Minister would use the budget to address the issue of VAT. There was a lobby seeking an exemption from VAT for non-resident performing artists' fees for non-profit organisations. Performing arts companies or festivals are forced to pay VAT on the fees of many artists who come here from abroad. Many such artists are Irish people who have been forced to work overseas. VAT represents a major imposition on many small festivals and could put them out of business. There was an expectation that this matter would be addressed in the budget. My understanding is that the exemptions set out in the relevant EU directive do not require a change in legislation but simply a reinterpretation of current VAT law in Ireland. This can be achieved by granting an exemption to not-for-profit cultural arts companies from the payment of VAT on the fees of non-resident performers. I am sure the Arts Council could provide a definition of such companies. I would like consideration to be given on Committee Stage to the removal of VAT on fees of non-resident artists.

The issue of VAT on many of our tourism products must be addressed. The VAT rate of 13.5% is one of the highest in the euro zone, the second highest after that in Germany. This makes our tourism product less competitive. If one goes to Portugal, France or Spain, for example, one pays on average about 5% in VAT on accommodation and meals, whereas the rate in Ireland is 13.5%. That is a considerable amount of money, even if one is only talking about a bill of €100.

I wish to bring the issue of business tourism to the attention of the Minister of State. People who come to Ireland for conferences are charged VAT on their accommodation, food and so on. In other countries, they can reclaim VAT paid. If, for example, they attend a conference in Northern Ireland, they can reclaim the amount paid. One cannot reclaim it here. This matter should be re-examined.

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