Brian Lenihan Jnr (Dublin West, Fianna Fail)

Although they have attempted to do so, my officials find it difficult to put an exact figure on the amount that would be lost to the levy were capital allowances permitted. As Deputy Bruton is aware, the income levy has been introduced as a measure to re-establish tax revenues. It applies across all income streams and it is determined on an individual basis at progressive rates, depending on the financial circumstances of the individual. The amendment proposed by the Deputy would grant special treatment to those individuals who are obliged to invest in capital assets to satisfy requirements of the particular sector in which they trade. That would be contrary to the general thrust of the policies underpinning the income levy and would place certain taxpayers in a preferred position over others.

The tax system already provides reliefs in respect of such capital investments, allowing the investor to write off against income tax in full the relevant cost of the investment over a defined period of time. The capital investment referred to by Deputy Bruton can already be claimed against income tax and written off in full over the period of the investment. I fail to see how the 1% levy prejudices the person in question. It should be noted that the acquisition of assets for use in a trade normally results in an increase in the asset wealth of the business and the possibility of the owner disposing of this asset at a gain at a later date.

Deputy Bruton indicated on Committee Stage that the particular capital investments about which he was concerned and which prompted this amendment related to farming investments to comply with the EU nitrates directive. The Department of Agriculture, Fisheries and Food made generous grants available for many of these particular capital projects. The remainder of the cost of these projects can be written off in the normal way against income tax.

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