Brian Lenihan Jnr (Dublin West, Fianna Fail)

This new tax is estimated to yield €95 million in 2009 and €150 million in a full year. Further details are contained in the summary of budget measures.

DIRT

There will be a new rate of DIRT of 23% on ordinary deposit accounts and 26% on certain other savings products which will raise €85 million in 2009.

Income Tax

I will increase the standard rate tax band by €1,000 for a single person and €2,000 for a married two earner couple to help maintain its real value and to ensure the maximum possible number of taxpayers continue to pay tax at the standard rate of 20%. This will cost €200 million in a full year.

Mortgage Interest Relief

In relation to mortgage interest relief, from 1 January 2009, the rate of tax relief for first-time buyers will be increased from 20% to 25% in years one and two of the mortgage and to 22.5% in years three, four and five. This change will benefit first-time buyers who purchased since 1 January 2005. The rate for years six and seven will remain at 20%. First-time buyers relief ends after year seven. To fund this change, the relief for non-first time buyers will be reduced from 20% to 15%. This rebalancing makes for a fairer system and helps those buyers with the biggest financial exposure and those facing falling property values. Circumstances can change of course and this rating structure is not set in stone. It is very much tailored to current market conditions.

TAXATION MEASURES TO PROMOTE ECONOMIC CONFIDENCE

Business Taxation — Keeping Ireland Competitive in a Global Economy

Successive Governments since the 1950s have recognised the importance of a corporation tax regime which incentivises investment and employment in key economic sectors. The past 20 years have seen Ireland become a major centre in the areas of technology, pharmaceuticals and financial services to name but three.

The 21st century economy is now mobile, globalised and increasingly knowledge-based. As a nation, we have to ensure that we are a location of choice for foreign direct investment and one in which indigenous industry is able to prosper. We became a global player in manufacturing in the 1980s and 1990s and this decade has shown that we can adapt and attract global players to Ireland and build local competencies alongside them. We have managed to build indigenous global players as well.

The 12.5% rate of corporation tax is an important element in our taxation system. It has been a cornerstone of our industrial development in the past decade. I emphasise that this rate of tax is not for changing upwards and it will continue to be a central part of Ireland's economic brand. Ireland's economic prospects are dependent on a vibrant and modern business base and I know that virtually all sides of this house will agree with me that our rate of corporation tax is essential to this.

The Government is convinced it is important, despite the need to secure a substantial increase in tax, to maintain and enhance pro-employment business tax reliefs. As an economy we are open to new business and new investment. I am bringing forward a number of measures to support jobs, encourage enterprise and enhance our productive capacity.

R&D Tax Credit

The R&D tax credit available to companies will increase from 20% to 25% putting it to the forefront of R&D regimes globally. This will increase Ireland's attractiveness as a location for R&D activity and it will provide a well-targeted stimulus for such value-added activities. I will consider making further enhancements in the forthcoming Finance Bill.

Intellectual Property

Intellectual property has become important globally in recent years and we need to ensure that our tax regime fully reflects the changes which have taken place in this area. If this sector can provide jobs and revenue to the State, I am willing to listen. I have asked the Commission on Taxation to investigate options in this area and I plan to return to it in the future.

New Ventures

In recognition of the challenges faced by new and start-up companies in these challenging economic times, I propose a remission in corporation tax and capital gains tax in their first three years of operation with certain limits.

Corporation Tax Dates

It is important that all sections of the economy and community play their part in addressing the fiscal challenges. Recognising the positive changes made in the corporate area, I propose to bring forward the payment dates for companies paying more than €200,000 corporation tax on their profits. This will yield €350 million in 2009 on a once-off basis. Details are in the summary of budget measures.

Filing of Tax Returns

Earlier this year I signed the order for mandatory electronic filing and payment of tax. This is a modern, secure and easy method for the payment of taxes for business. As a further pro-business measure, I propose to encourage take up of Revenue's online services by providing a general extension to existing deadlines where returns and payments are made via the online systems.

Stamp Duty on ATMs and Cheques

To encourage greater use of electronic means of payment for commercial, financial and retail transactions, I propose to build on the initiative introduced in last year's budget by halving the stamp duty on combined ATM cards from €10 to €5. To fund this measure, the stamp duty on cheques will be increased from 30 cent to 50 cent per cheque. This important step will further encourage the use of electronic payment methods. To promote the development of e-payments in the economy, which has the potential to yield significant competitive benefits, the Government will establish shortly a high-level group comprising representatives of the main stakeholders to direct the preparation and implementation of a national payments implementation plan over the next two years.

Rebalancing Capital Taxes

The related areas of stamp duty on commercial properties and capital gains tax on such transactions are imbalanced and I propose to rectify this. This imbalance does not apply to residential property because the principal private residence exemption means there is no capital gains liability in such cases.

First, I am cutting the top rate of stamp duty on commercial property from 9% to 6%.

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