Seán Ryan (Dublin North, Labour)
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Question 30: To ask the Minister for Finance the value of the tax relief for each year from 2000 to date in 2006 under capital allowances for the construction of private hospitals; and if he will make a statement on the matter. [24944/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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This relief was introduced in Finance Act 2001 and came into effect in May 2002. I am informed by the Revenue Commissioners that for the tax year 2003 and earlier years claims for the relief mentioned in the question were aggregated in tax returns with other claims and could not be distinguished from the reliefs claimed in respect of different schemes. Accordingly, the specific information on costs for 2002 and 2003 are not available.

Provisions were included in the Finance Act 2004 to allow this data to be obtained separately in future. As regards the tax year 2004, the latest year available, this information was included in personal income tax returns due for filing in October, 2005. Based on the information that has been received and collated to date, a total of €4.5 million was included in the relevant income tax returns for 2004 as claims for capital allowances for the construction of private hospitals. This figure would correspond to a maximum Exchequer cost of the order of €1.9 million for these returns in terms of income tax forgone. These figures are preliminary estimates and may change as further returns are processed. I should also point out, however, that Revenue are concerned at preliminary indications that in some instances the new, separately categorised data on property incentives may not have been correctly entered on the 2004 Income Tax returns. Revenue is engaging with the tax practitioner bodies to draw attention to these deficiencies and to rectify them. Revenue has also increased awareness among its own staff involved in processing tax returns of the need to ensure, through closer examination of the returns, that they are correctly completed.

Data for the tax years 2005 and 2006 is not yet available as the income tax returns for those years are not due for filing until October 2006 and October 2007 respectively.

It should be noted that the scheme of capital allowances for the construction of private hospitals was reviewed by Indecon Economic Consultants as part of the overall review of property tax incentives in 2005. Indecon consulted widely in the course of their review, including consultations with the Department of Health and Children and the Health Service Executive. Their report was published on 6 February 2006 and is available on the Department of Finance's website. The summary of the main findings from Indecon's analysis is as follows:

∙'There has been an overall increase in planning applications and approvals for private hospitals since 2000 but most have not proceeded to date.

∙Most of the extra investment in the sector would either not have been undertaken, or would have taken longer to come on-line in the absence of the tax incentive scheme.

∙While it is too early to provide detailed estimates of the impact of the scheme on the supply and on the costs of hospital beds, Indecon believes the scheme has the potential to address supply shortages in the sector and to reduce costs.'

The net cost of this measure to date was estimated by Indecon at €23m from 2002 to 2005. This cost will be spread over a number of years.