Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I move amendment No. 12a:

In page 67, to delete lines 34 to 37 and substitute the following:“ “(n) for the purposes of a trade which consists of—

(i) the maintenance, repair or overhaul of aircraft used to carry passengers or cargo for hire or reward, or

(ii) the dismantling of aircraft of the kind referred to in subparagraph (i),for the purposes of the salvaging or recycling of parts or materials,”,”.

These amendments relate to section 31 of the Bill as passed by the Select Sub-Committee on Finance. Section 31 provides for a scheme of accelerated capital allowances for the provision of facilities for the purposes of the maintenance, repair and overhaul of commercial aircraft, and it is intended to apply for a five-year period, commencing by ministerial order. These capital allowances, in the form of industrial buildings allowances, will allow for the write-off of qualifying expenditure over seven years and will be subject to the normal conditions and restrictions that apply to the use of such allowances by investors in projects of this type. This is a targeted relief and has the potential to encourage a very promising industrial sector from the perspective of long-term high-quality job creation. During the debate on Committee Stage, I undertook to consider whether this relief could be extended to the area of aircraft dismantling for the purpose of salvaging and recycling of aircraft parts and materials, in addition to the activities already allowed under the legislation as drafted. This is referred to as parting out in the industry. A strong case was made by Deputies Mulherin and Naughten that such an extension would be of benefit, particularly to Knock airport. Having considered the matter, I am satisfied that an extension of the capital allowances relief to this sector would be beneficial. For these reasons, I am proposing amendments Nos. 12a and 14a to section 31.

The extension is to apply generally and will not be restricted to Knock airport. There are two amendments, the first of which provides for the extension of the relief. The second allows for commencement by ministerial order of the different elements to be done at different times. During the debate on Committee Stage, it was put to me that the various restrictions on the use of such allowances should be relaxed for this relief in order to make it more attractive. I indicated during the debate that I was not disposed to agree to that, and I repeat that point. This is a generous relief and there is no need to make it any more generous. I commend the amendments to the House. I trust Deputy Naughten will consider amendment No. 13 to have been dealt with.

Deputy Pearse Doherty wishes me to report to the House within three months of the coming into operation of the section on its impact on regional airports and rectify any distortions to competition that it may have caused. The Government regularly examines supports for all sectors of the economy as part of the annual budget and finance Bill process. The relief provided for in the section is available for these activities at any airport. Nothing in the legislation restricts the relief to any particular airport. The amendment I have introduced widening the scope of the relief to salvage operations will also be available without restriction to any of our airports. It is not necessary to put into legislation commitments of the kind suggested, certainly not in advance of the section's coming into operation. The legislation is framed in such a way as to avoid the kind of competitive distortion that Deputy Doherty is concerned about. I do not anticipate such a problem at this stage but I intend to keep the relief under review over the period of its operation to ensure it operates properly. In that way, I can make whatever changes seem necessary and there will be an opportunity for any such proposals to be debated in the House. I am not prepared to accept amendment No. 16.

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