Charlie McCreevy (Kildare North, Fianna Fail)

As regards stamp duty, first-time buyers and other owner-occupiers pay no stamp duty on new houses up to 1350 sq. ft. On houses bigger than this duty is only paid on a quarter of the total value of the house plus the site or on the site value only. In practice a new house must cost approximately €760,000 for first-time buyers before this duty arises.

The Senator also referred to the issue of prosecutions and the tax amnesty. As Minister for Finance I have done more to combat tax evasion than any previous holder of the office. I have provided powers to the Revenue in the Finance Act 1999 and in later years, which have facilitated the collection of over €1billion in tax interest and penalties through the various investigations carried out by the Revenue in recent years. Revenue powers have recently been reviewed by the Revenue powers group and I will be receiving its recommendations in the context of the 2005 Finance Bill.

The Senator called for the introduction of a €2,000 annual tax credit for relief to amateur sportspersons. This proposal was discussed at length in the Dáil on both Committee and Report Stages where I made my views clear. This proposal of a tax credit for relief to amateur sportspersons has been promoted by the Gaelic Players' Association whose members are not paid in respect of their direct participation in the games. In effect it means that the taxpayer should subsidise the Gaelic players when their own governing body is unwilling to do so. This is the nub of the matter. Furthermore, the proposed tax credit of €2,000 per annum per sportsperson is more than the total tax credit available to a non-PAYE single person, which stands at €1520 while a PAYE tax credit of €1040 is almost half of what the GPA propose to be granted to a select group of players. A tax credit of €2,000 is the equivalent of exempting €10,000 of income from tax for a standard rate taxpayer and is hardly justifiable in the circumstances. For these reasons as well as the inevitable consequences that the introduction of this credit would lead to other categories of individuals who give of their time and incur expenses in a wide variety of community, youth and other voluntary work demanding a similar credit on equally supportable grounds, I cannot agree to this proposal.

The extension of the urban and town renewal schemes is intended to provide for an orderly winding down of the schemes. I received numerous representations from across the political spectrum, including Members of the Opposition, urging me to extend the deadline for such schemes. All the extensions are subject to conditions which will limit the number of projects that can avail of the extensions. For example, the urban renewal scheme must have incurred 15% of the total project costs under the scheme by 30 June 2003. Furthermore, these schemes are also based in integrated area plans which set out the plans of relevant local authorities which deal with the redevelopment of these often deprived areas from an economic, social and community point of view.

Senator Browne referred to capping the level at which an individual may claim certain reliefs and allowances. The Senator may be interested to learn that in the budget of 1998 I introduced a cap of €31,750 in relation to an amount that an individual passive investor can offset against non-rental income. Any unrelieved allowances can be carried forward for offset against the individual's rental income. Other relief schemes, such as the business expansion scheme and the film relief scheme, also have a limit of €31,750 which individual investors can set off against their general income. The placing of additional limitations on the setting-off of income from such schemes is not something I would favour as it may limit the effectiveness of these schemes in providing the economic and social benefits to the areas concerned.

A number of Senators, including Senator McDowell, referred to the issue of tax expenditures and tax incentives. There is no doubt that tax reliefs and incentives can be very effective. The evidence of this is for all to see in the shape of significant developments, regenerations and improvements. The question which has to be posed on a regular basis, not least by myself, is whether such reliefs continue to be as necessary in the current situation when we have lowered tax rates so significantly in the past seven years. In other words, when rates are brought down, does the tax base need to be broadened or at least, stabilised, in order to protect the flow of revenue to the Exchequer?

There is another prong to this theory, namely that when one lowers tax rates, the incentive to shelter from the Revenue Commissioners should be similarly reduced. Regardless of the theory, the hard reality is that there will always be an understandable inclination among certain taxpayers to try to reduce their tax liabilities. This has proven true despite the reductions in the rates of income tax and corporation tax. It has been acknowledged the world over. One has only to observe the debate about tax evasion in the United States, hardly a high tax economy, to have an understanding of the complexities surrounding this issue.

In Ireland, Ministers for Finance of all political hues have recognised this and have for many decades accommodated this by introducing tax incentive schemes in order to harness the inclination so that it will be put to some use for the wider economy. I have spoken before about my experiences of the end of the tax year rush to participate in certain schemes in order to reduce the tax being paid regardless of the merits or otherwise of the scheme in question.

In my time as Minister for Finance, I too have introduced a number of incentive schemes. I have also abolished a number and amended, clarified or curtailed others. I believe that in order for tax incentives to be effective, we must have people who are paying tax and are prepared to invest. Tax expenditures reduce the tax base and it is, by and large, higher earners who avail of them. As with most things in life, the issue is one of balance. We need to strike a balance between encouraging higher earners to avail of tax incentives in order to meet a need in our economy or society and the cost of this.

I thank Senators for their contributions to the debate and I look forward to Committee Stage tomorrow which will offer an opportunity for more detailed discussion.