Denis Naughten (Longford-Roscommon, Fine Gael)
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Question 506: To ask the Minister for Finance his plans to introduce tax relief for child care fees; and if he will make a statement on the matter. [25072/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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As the Deputy will be aware, the Government is already providing support to parents through child benefit, grants under the equal opportunities child care programme, capital allowances for expenditure on child care facilities and an exemption from a benefit-in-kind charge where employers provide free or subsidised child care facilities for their employees. I believe there is a need to examine pragmatically and practically what can be done in regard to providing child care support to parents. The introduction of any further supports through the tax system would, of course, be a matter for consideration in the context of the annual budget and Finance Bill.

Denis Naughten (Longford-Roscommon, Fine Gael)
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Question 507: To ask the Minister for Finance if he will introduce roll-over relief on capital gains tax for landowners who have had their lands purchased for road construction; and if he will make a statement on the matter. [25073/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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As previously advised to the Deputy in replies to parliamentary questions on 30 November 2004 and on 28 June 2005, capital gains tax, CGT, is a tax on a capital gain arising on the disposal of assets. A 20% rate of CGT applies on the gains arising on the disposal of assets, including land which is the subject of a compulsory purchase order, CPO. It was announced in the 2003 budget that no roll-over relief would be allowed for any purpose on gains arising from disposals on or after 4 December 2002. This relief was introduced when CGT rates were much higher than current levels. In effect, it was a deferral of tax to be paid, where the proceeds of disposal were reinvested into replacement assets. The taxation of these gains would take place following the eventual disposal of the new assets without their replacement.

The abolition of this relief was in accordance with the overall taxation policy of widening the tax base in order to keep direct tax rates low. Reliefs and allowances made sense when CGT rates were 40% and above. In budget 1998, the rate was halved from 40% to 20%. Taxing capital gains when they are realised is the most logical time to do so, and this change brought CGT into line with other areas.