Emmet Stagg (Kildare North, Labour)
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Question 152: To ask the Minister for Finance the Government's response to the final warning issued by the European Commission in July 2006 regarding the treatment of public bodies as non-taxable persons; and if he will make a statement on the matter. [33109/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I presume the Deputy is referring to the letter of Reasoned Opinion received from the EU Commission on the 4th of July 2006.

Under EU Law, with which Irish Law must comply, public bodies are generally exempt from VAT. This means that they do not charge VAT on the services and are not entitled to recover VAT incurred on the goods and services which they purchase.

In December 2004, the European Commission issued an infringement notice concerning the VAT treatment of public bodies. This arose on foot of a complaint regarding the fees charged by local authorities for the provision of off-street car-parking facilities. The infringement expressed the view that Irish legislation was lacking regarding the interpretation of those aspects of the Sixth VAT Directive dealing with the VAT treatment of services delivered by public bodies where distortion of competition is likely to arise.

Ireland replied to the infringement notice in April 2005. The Commission responded with a Reasoned Opinion on the 4th of July 2006 which reiterated their concerns regarding the Irish legislation. A Reasoned Opinion is a stage in the process that could lead to a dispute being brought to the ECJ. Ireland issued a response to the Reasoned Opinion on the 4th of September 2006 setting out its position. The EU Commission have not issued any further correspondence.

Michael D Higgins (Galway West, Labour)
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Question 153: To ask the Minister for Finance in relation to tax incentives on psychiatric care institutions, the number of applications which have been made under the scheme; the number of applications which have been approved; the number of hospital beds to be supplied by the approved applications; the expected cost of the tax foregone on these developments; and if he will make a statement on the matter. [33107/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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A scheme of capital allowances for expenditure incurred on the construction and refurbishment of qualifying mental health centres was introduced by me in this year's Finance Act. The tax relief scheme has not yet commenced as aspects of it require the commencement of legislation and the preparation of regulations by my colleague, the Minister for Health and Children, Ms Mary Harney TD. I understand from the Minister for Health and Children that the relevant legislation and regulations will be implemented next month. I will then make the necessary commencement order for the scheme of capital allowances shortly thereafter.

It is intended that the scheme will operate on broadly the same terms and conditions as already apply in the case of the similar relief for general private hospitals. Among the conditions that must be satisfied if a mental health facility is to qualify for tax relief under the scheme is that the facility is an approved centre (i.e. registered under the Mental Health Act, 2001) and that it must have a minimum of 20 in-patient beds. As I mentioned in my Budget speech last year, the scheme is estimated to cost €2 million in a full year.