Dara Calleary (Mayo, Fianna Fail)

I am aware of the specific case. The recommendation concerns the new 80% tax rate that applies to the profits or gains from certain disposals of development land. This rate applies where profits or gains are attributable to rezoning decisions that are made on or after 30 October 2009. The proposal has been brought forward from the Committee Stage of the Bill in the Dáil. The Senators' intention in making the proposal is that the 80% tax rate will not apply in situations where a rezoning decision that is made by way of adopting a revised development plan on or after 30 October 2009 does not alter the zoning that existed in the form of a draft development plan before that date. A similar amendment was proposed on Committee and Report Stages in the Dáil and was not accepted.

The proposal envisages a situation where the zoning proposed in a draft development plan is unchanged in the actual development plan. However, the Planning and Development Act 2000 contains provisions for a lengthy and extensive public consultation process on a draft development plan that may result in amendments to this plan. I am given to understand that it would be unusual for a draft development plan to remain unchanged following the consultation process. I am also concerned that certain amendments to a draft development plan arising from the consultation process could have the effect of further increasing the value of land above the value pertaining following publication of that plan. In such circumstances it would not be appropriate to deem the zoning of land in a draft development plan to be the actual zoning of the land, as requested by the Senator. Such a deeming would enable some of the profits or gains that should properly be chargeable at the 80% tax rate to avoid this charge.

On Committee Stage of the Bill in the Dáil, Deputy Richard Bruton was concerned about land that was being rezoned as part of a draft development plan prior to October 2009 but which would not be formally adopted until after 30 October 2009 and would therefore be affected by the new windfall gains provisions. He wondered whether this was likely to be an isolated case that would not have knock-on effects on other cases. The Department of the Environment, Heritage and Local Government has advised that it is far from being an isolated case and that a significant number of both development plans and local area plans would have been at draft stage prior to 30 October 2009 and been finalised after that date or have yet to be finalised. Even within the development plan in question, lands other than the so-called heritage site mentioned previously are proposed to be rezoned from a non-development land use to a development land use. The case the Senators have in mind is far from being an isolated case, either within that local area, that local authority area or the country as a whole.

While we have not been persuaded to accept the Senators' proposal, I wish to point out that not all the profits or gains arising from a land disposal would be attributable to the actual rezoning decision and subject to the 80% tax rate. The publication of a draft development plan with a stated intention to rezone land would have the effect of increasing the market value of land at the time of publication rather than at the time of adoption of the plan as there would be an expectation that the draft development plan would subsequently be adopted as the actual development plan and the rezoning thereby implemented. Thus, any profits or gains attributable to this part of the increase in the value of the land would not be subject to the 80% tax rate. Therefore, it is not clear that all of the profits or gains arising in the situation envisaged by the Senators would be chargeable to tax at the 80% rate. Any profits or gains that are attributable to the actual rezoning of the land after the adoption of the plan, where that plan is adopted after 30 October 2009, would be quite properly chargeable to tax at the 80% rate.

Recommendation put.

The Seanad divided: Tá, 17; Níl, 27.

Tellers: Tá, Senators Maurice Cummins and Liam Twomey; Níl, Senators Niall Ó Brolcháin and Diarmuid Wilson.

Recommendation declared lost.