Richard Bruton (Dublin North Central, Fine Gael)
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Question 56: To ask the Minister for Finance if he has conducted an evaluation in conjunction with the Department of Health and Children of the tax relief for private hospital investment; and if it meets the public policy objectives in the health sphere. [38831/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Capital allowances are available in respect of capital expenditure incurred on the construction of certain qualifying private hospitals. Currently, the expenditure can be written off over seven years at the rate of 15% per annum over the first six years and 10% in year seven. Capital allowances for private hospitals is one of the many reliefs which underwent a detailed review by my Department in conjunction with the Revenue Commissioners with the help of external consultants. I announced in my budget speech that I propose to publish all the relevant reports reviewing these various tax reliefs in time for the Finance Bill.

The final report from the consultants has been received by my Department. With regard to the private hospital incentive, the consultants found while there has not been a high level of investment yet under this scheme, there are plans for a number of these facilities coming on line. The consultants stated that the incentive has the potential to contribute to the challenges facing the health sector. The consultants recommend the continuance of the scheme subject to some amendments, including an extension of the clawback period and a new option for investors to claim all relief in year one but at a restricted 50% rate. In line with the recommendations from the consultants, I have decided to maintain this allowance with some minor amendments which I will announce in the context of the Finance Bill.

At present, to qualify as a private hospital eligible for capital allowances, the hospital must, inter alia, provide five specialist services from a list of 14 potential services ranging from oncology to paediatric services. This list will be augmented to include psychiatric care services, as announced in the budget. In addition, the current scheme of capital allowances for private hospitals will be extended to provide for capital allowances for the construction or refurbishment of buildings used as private psychiatric hospitals. While the hospital will provide services to private patients, 20% of the bed capacity must be available for public patients and the hospital must provide a discount of at least 10% to the State in respect of the fees to be charged in respect of the treatment of these patients.

The new scheme is subject to clearance by the European Commission from an EU state aids perspective. Full details will be announced in the Finance Bill 2006.