Seán Sherlock (Cork East, Labour)
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Question 127: To ask the Tánaiste and Minister for Finance his views on the increasing number of high net worth individuals avoiding capital acquisitions tax on multi-million house transfers as a consequence of Section 86 of the Consolidated Capital Acquisitions Act 2003; if an audit of such transactions has been conducted by the Revenue Commissioners; and if he will make a statement on the matter. [17174/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that section 86 of the Capital Acquisitions Tax Consolidation Act 2003, subject to conditions, grants exemption from Capital Acquisitions Tax in respect of a house comprised in a gift or inheritance. The conditions require that the donee or successor must occupy the house for the period of 3 years ending with the date of the gift or inheritance. Where that house has replaced other property, the beneficiary must have resided either in that house or in the other property for periods which, taken together, amounted to 3 years in the 4-year period prior to the date of the gift or inheritance. In addition, the donee or successor, if under the age of 55, must continue to occupy the house as his or her only or main residence for a further period of 6 years. However, there is provision to allow for a replacement house in that period and for situations where the individual concerned is not in occupation of the house because of work obligations abroad.

Claims for relief under section 86 of the Capital Acquisitions Tax Consolidation Act 2003 in respect of high-value houses are verified.

Amendments to section 86 were made in the Finance Act 2007. These amendments were a result of Revenue's experience in administering claims under this section, including taking issues before the Appeal Commissioners.

Firstly, relief is not available where a donee lives in the principal private residence of the donor, where that residence is gifted, unless the donor is compelled by reason of old age or infirmity to depend on the services of the donee. This is to counter, in particular, the argument that, where the donee, having until then lived in the parental home, is gifted a house by a parent, the 3 year period of occupancy of the gifted house is satisfied.

The second change requires that the gifted house be owned by the donor during the 3-year period even if they were not his or her principal private residence. This is to counter a claim for relief where an individual sells his principal private residence to his parent for full value and the house is then gifted back to that individual by his parent. It also counters the use of family trusts in gifting houses to children.

Joe Costello (Dublin Central, Labour)
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Question 128: To ask the Tánaiste and Minister for Finance his proposals for changes for mortgage interest relief for first time buyers and those who bought a house in the past seven years in regard to the commitment contained in the Programme for Government; the estimate of the cost of the proposed changes; and if he will make a statement on the matter. [17153/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Programme for Government contains a commitment to increase in Budget 2008 the ceiling on mortgage interest relief for first-time buyers and those who bought a house in the past seven years, from €8,000 to €10,000 for single people and from €16,000 to €20,000 for couples or widowed persons. The estimated cost of this measure is about €10 million in a full year in 2007 terms.

The Programme also contains the commitment that, as income taxes are reduced, the rate of mortgage interest relief will be kept at 20% for all home owners. The cost of this will form part of the overall cost of the commitment to reduce the standard rate of tax which is to be achieved over the lifetime of the Government if economic resources allow.

I would draw the Deputy's attention to the fact that the tax measures in the Government Programme will be implemented subject to the controlling economic and fiscal framework and that the Government are committed to operating a responsible fiscal policy characterised by broad budget balance and a declining debt burden.

In addition, the Deputy will be aware that last week I published the Finance (No. 2) Bill 2007 which provides for a stamp duty exemption for a first-time purchaser of a house or apartment which he or she occupies as his or her only or principal place of residence. The Government intend to have the Bill enacted before the Dáil rises for the Summer recess.

Róisín Shortall (Dublin North West, Labour)
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Question 129: To ask the Tánaiste and Minister for Finance the tax incentive measures he will introduce to ensure that Ireland meets the target agreed by EU leaders of increasing biofuels to 10% of all vehicle fuel by 2020; and if he will make a statement on the matter. [17179/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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While the promotion of biofuel is primarily a matter for my colleague, the Minister for Communications, Energy and Natural Resources, I am pleased to inform the Deputy that in the Finance Act 2006 I provided for significant tax measures to promote biofuels in Ireland. This scheme, which received the necessary EU State Aid approval, commenced in November 2006 and will:

provide for excise relief on up to 163 million litres of biofuels per annum

cost over €200m over 5 years;

when fully operational, result in CO2 savings of over 250,000 tonnes per annum;

contribute towards meeting a target of 5.75% transport fuel market penetration by biofuels by 2009;

help reduce our dependency on conventional fossil fuels, and

stimulate activity in the agricultural sector.

As a complementary measure, I provided in Finance Act 2006 for a 50% VRT relief to promote new flexible fuel vehicles (cars designed to operate on biofuels) for an initial period of two years.

The overall level of excise relief available for biofuels under the above mentioned Scheme is that which had been proposed by the Minister for Communications, Marine and Natural Resources in advance of Budget 2006. It is regarded as a level which is sufficient to match Ireland's output potential in relation to renewable energy crops for motor fuels over the coming years. These fiscal incentives were designed to kickstart the domestic biofuels industry and the evidence suggests that this is happening.

The Deputy might wish to note that there are additional non-fiscal measures that can be used to promote biofuels and reach the targets referred to. To provide further market certainty and encourage projects of scale, the Government recently announced its intention to move to a Biofuels Obligation by 2009, with targets for market penetration for biofuels of 5.75% in 2009 and 10% by 2020. The scheme is included in the Programme for Government in conjunction with a commitment to work with our EU partners to require biofuels used in transport to comply with an environmental certification system which incorporates sustainability criteria in terms of biofuel production.