Peter Power (Limerick East, Fianna Fail)

I am taking this Adjournment matter on behalf of the Minister for Finance, Deputy Brian Lenihan.

As Senator Ross is aware, the Finance Bill provides for changes to health expenses relief announced in the budget, which will be granted at the standard rate from 1 January 2009. There is an exception for nursing home expenses which will continue to be allowed at the marginal rate. Nursing home expenses are exempt from this measure to allow time for the new nursing homes support scheme to be put into operation before any changes are contemplated in relief for nursing homes. This initiative on health expenses relief will yield €120 million in 2010 and €150 million in a full year.

The changes provided for in the Finance Bill follow from the changes made in the Finance Act 2007, that is, the removal of the de minimis threshold of €125 for a single individual and €250 for a married couple. The Finance Act 2007 also provided for the removal of the requirement that there be a defined relationship between the taxpayer and the person who is the subject of the tax claim.

Standard rating health relief expenses will make the tax system fairer and more equitable for all taxpayers. There is a commitment in the programme for Government to increase the fairness of the tax system and this measure is being introduced in line with that commitment. The standardising of health expenses relief brings it into line with other reliefs such as those for rent, trade union subscriptions, medical insurance, third level fees and service charges. The standard rating of health expenses relief will result in better value for money for the Exchequer and will ensure that the relief will benefit the broadest range of taxpayers in a fair and equitable manner.

It is difficult to justify reliefs for one sector of society simply because they earn more than another sector. Health expenses relief is an expensive relief that has quadrupled in the past four years. It has risen in cost from €100 million in 2004 to €400 million in 2008. It is difficult to see how we can afford such a generous relief in these challenging economic times. There can be no doubt that the savings accrued from standard rating health expenses relief of €150 million in a full year will raise much needed revenue.

The Minister received a number of submissions from the dental profession setting out its concerns in this area. I will confine my remarks to the tax issues raised. The dental profession has sought the extension of the relief to routine dental treatments and has based the argument for this on a comparison with the relief available for routine visits to a doctor. However, routine dental treatment has never qualified for tax relief and dentists are not in competition with doctors. The cost of such a concession is estimated to be very high. In the current fiscal situation such a concession is out of the question.

Routine dental treatment for the purposes of the relief include scaling, extraction and filling of teeth and the provision and repair of artificial teeth and dentures. Routine dental treatment has been excluded from health expenses relief since the relief's inception in 1967. I am sure Senator Ross is aware that routine dental treatment is provided through Health Service Executive clinics and by private dentists on the HSE panel to persons who meet the relevant PRSI requirements. The service is now available free of charge to all medical card holders over 16 years of age.

Senator Ross also raised the issue of dental tourism, which has been an issue as long as I can remember. The cost of dental treatment in neighbouring countries has historically been lower than in Ireland. A significant difference in price is required for customers to travel to Northern Ireland for dental treatment and significant savings on costs would also be required for a customer to travel to mainland Europe for dental treatment. Nevertheless, I understand that this happens. It must be understood that there is a need for Irish dentists to be competitive.

I would also like to deal with requests from some dentists to have health expenses relief restricted to treatment undertaken in Ireland. The position is that tax relief is available for expenses incurred for treatment abroad. The reason for this is that not to do so would result in an infringement of the EC treaty. A claim could be made that not to extend the relief for expenses incurred for treatment obtained abroad could result in state aid claims or claims that such a policy places a restriction on the free movement of capital.

Some dentists have raised the status of dentists under the Competition Act 2002. This matter is primarily the responsibility of the Minister for Enterprise, Trade and Employment and it would not be appropriate for me to comment on behalf of the Minister for Finance in that regard.

Taking account of all the issues I have outlined, particularly with regard to equity and fairness, I am sure the Senator will appreciate that the Minister for Finance is not in a position to reverse the measure announced in the budget or provide the concession on routine dental expenses as requested by the representations of the dental industry.