Brian Lenihan Jnr (Dublin West, Fianna Fail)

Many worthy sentiments were expressed in the House this morning. Of course job creation is important. Deputy Pearse Doherty argued that the Bill lacked any employment incentives. The budget contained numerous job creation incentives. Quite apart from the need to ensure economic stability, the Bill provides for the employment and investment incentive scheme and reliefs for energy efficiency works, as well as an extension of the film relief, which has generated an amount of activity. There are a number of other matters which I hope we will have an opportunity to consider in what remains of this debate.

While I do not propose to accept the amendment, I must make the point that economic impact assessments of two measures in this year's Bill will be undertaken. The House will be aware that the issue of cost-benefit analysis of tax expenditures was examined by the Commission on Taxation, which was of the opinion that tax expenditures should be subject to ongoing evaluation and appropriate and timely cost-benefit analysis. Under the Finance Act 2010, there was a cost-benefit analysis of tax expenditures following the acceptance of an amendment from Deputy Burton, although her proposed period of one month for completing the report was extended to three months by a Government amendment. In order to undertake the report suggested by this amendment, my officials and those of the Revenue Commissioners would need appropriate data from tax returns. The commission acknowledged that such a requirement would add complexity and volume to standard tax return forms and increase compliance costs for taxpayers.

I agree it is desirable to provide for ongoing monitoring and evaluation to ensure that tax expenditures remain fit for the purposes for which they were designed and that they continue to be economically efficient. It could be argued it is reasonable and proportionate that where taxpayers are availing of tax expenditures they should supply such information to the Revenue Commissioners. However, I trust the House will understand that given the current economic position, I do not consider this an appropriate time to introduce additional complexity and cost for hard-pressed taxpayers.

I will make a few points on the amendment itself. One month is an insufficient time, as I pointed out. Second, as stated in last year's cost-benefit analysis report, there is an underlying principle of proportionality in cost-benefit analysis which states that the level of resources invested in carrying out the analysis should be commensurate with the scale of the expenditure involved. Third, this is not the time to conduct cost-benefit analyses of all tax expenditures in the Bill, which involve a total of 13 sections. Deputies will be aware that another finance Bill will need to be passed before 1 April to give effect to the Civil Partnership Act and possibly to other measures which have had to be postponed because of the truncated timescale for this Bill. Given the pressing issues facing the economy and the country, including the possible change of Government and of ministerial personnel, it would not be a good use of the Department's time to produce a cost-benefit analysis of measures in this Bill at the same time as it prepares for a new finance Bill and, very possibly although not necessarily, for a new political regime with different policy requirements from those of the current Government.

I agree with Deputy Burton that the completion of cost-benefit analysis is warranted in the majority of tax expenditures before they are introduced. As mentioned in the context of the current Bill, my officials have already prepared an economic impact assessment for the employment and investment incentive scheme. This assessment will be completed shortly and I intend it will be published. With regard to the new relief for energy-efficient measures, a similar advance assessment will be prepared before the section is commenced, and that measure is subject to a commencement order. A cost-benefit analysis of tax expenditures before their introduction is more appropriate than an analysis after the event. For that reason and for the others mentioned, I do not propose to accept the amendment.

Deputy Higgins made an eloquent case for the general principle of conducting cost-benefit analyses, and it has become an established administrative practice within my Department irrespective of legislative vesture. The crucial tax reliefs provided for in the Bill - the new employment and investment incentive and the energy efficiency works incentive - will be subject to cost-benefit analysis. As a matter of practice, this matter is already being attended to.

With regard to Deputy Higgins's theological reflections on the distinction between tax evasion and tax avoidance, I do not think his comparison to the contrast between mortal and venial sin is quite accurate. In terms of the theology of that era, I would prefer to say it is the distinction between the natural and the artificial method.

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