Dáil debates

Wednesday, 26 January 2011

Finance Bill 2011: Committee Stage

 

1:00 pm

Photo of Michael NoonanMichael Noonan (Limerick East, Fine Gael)

-----to somebody who had never had anything to do with building or development. It was a deal purely to reduce the person's income tax liability. It was the extension of the tax break industry that destroyed it. This has resulted in a situation in which the man and woman on the street are saying that tax breaks are a bad idea and they should all be abolished. It was in view of this that the Minister, when introducing the budget, said that all section 23 allowances and other capital allowances would be abolished immediately. I always thought that had a doubtful legal basis, because people who had entered into arrangements when investing in property were under contract, and the concept of legitimate expectation applied. There was a legitimate expectation that the arrangement would run until the end of the period for which the contract was signed.

I always thought - and I suggested at the time - that it would be a better arrangement if the Government had, because of the financial crisis and in the national interest, suspended the benefits for four years, so that in 2015, when times were better and the Exchequer could afford it, investors could again receive the benefit of the tax break. I think this would pass legal muster, and many investors would not have objected to it because rents are currently so low that they are not availing of the full tax credit anyway. Another major issue is that people have made arrangements with their banks for schedules of repayment, and the removal of the tax break would take the floor out from under these schedules. A deferral would not have done that, and it would have allowed investors to renegotiate deals with the banks.

Deputies Costello and Barrett are anxious to speak, so I will not continue. However, I ask the Minister to consider this again, as he has said he will do, and take these views into account.

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