Joe McHugh (Donegal North East, Fine Gael)
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Question 108: To ask the Tánaiste and Minister for Finance if he will consider removing capital gains tax for farmers who are forced to sell their land to local authorities for road building or road widening purposes, provided that the proceeds of the compensation is reinvested in the farm; and if he will make a statement on the matter. [28532/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I assume that the Deputy has in mind the re-introduction of roll-over relief. 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. 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.

As the Deputy will be aware, there is already in place a generous package of reliefs that continue to be available to the farming sector. As you will also be aware, it is a long standing tradition that the Minister for Finance does not comment on taxation matters in advance of the annual Budget.

Joe McHugh (Donegal North East, Fine Gael)
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Question 109: To ask the Tánaiste and Minister for Finance the reason farmers have been denied significant increases in personal tax credits available to employees and others whose income is paid through the PAYE system; and if he will make a statement on the matter. [28534/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The position is that the PAYE allowance, as it was then, was introduced in 1980 to improve the tax progression of PAYE taxpayers and to take account of the fact that the self-employed generally then had the advantage of paying tax on a preceding year basis. The argument was also made at the time that the general scheme of allowances discriminated against employees and in favour of other taxpayers.

There have been changes since 1980 — the self-employed now pay tax on a current year basis, for example. However, the PAYE allowance has become a tax credit. Moreover, given that there can be significant timing advantages in the payment of tax for the self employed, the employee credit is still perceived as necessary to ensure a balance in the system. The cost to the Exchequer of extending the PAYE credit to farmers and the self employed, including proprietary directors, is estimated at €610 million in a full year. The cost of abolishing the PAYE credit and increasing the personal credit by the same amount is estimated at €750 million in a full year. The additional cost would arise because the personal credit is transferable between spouses.

It should be borne in mind that there is already in place a generous package of reliefs and specific arrangements that continue to be available exclusively to the farming sector. These include income averaging; stock relief; accelerated capital allowances for expenditure incurred on farm buildings; accelerated capital allowances in respect of expenditure incurred on certain pollution control measures; capital allowances in respect of expenditure incurred on the purchase of milk quota; an exemption from income tax in respect of certain income from certain leased farmland and special tax treatment in respect of profits accruing as a result of the disposal of stock under statutory disease eradication measures. In addition, certain young trained farmers can also qualify for full relief from Stamp Duty on the transfer of land and can also avail of enhanced stock relief of 100 per cent.

Joe McHugh (Donegal North East, Fine Gael)
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Question 110: To ask the Tánaiste and Minister for Finance if there are plans to introduce a tax initiative scheme to finance future water and sewage schemes; and if he will make a statement on the matter. [28553/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am informed by the Revenue Commissioners that provision already exists for a limited scheme of tax relief in respect of expenditure incurred on the treatment of trade effluent and the supply of water. The scheme operates in conjunction with local authorities. It caters for a situation where, for the purposes of his or her trade, a person contributes a capital sum towards expenditure incurred by a local authority on an asset to be used for trade effluent control purposes or for the provision of water supply. Capital allowances may be claimed in respect of any such capital sums contributed, with amounts contributed being written off over eight years at the rate of 12.5% per annum.

I am also informed that, in the farming area, capital allowances are available for capital expenditure incurred on the construction of certain buildings or structures for the control of farm pollution. These include waste storage facilities including slurry tanks, soiled water tanks and effluent tanks. The scheme applies only to farmers who have put in place a farm nutrient management plan drawn up by an agency or planner approved by the Department of Agriculture and Food. For expenditure incurred on or after 1 January 2005 allowances can be claimed over 3 years with the expenditure being written off at the rate of 33 1/3% per annum. There are no plans for the introduction of further tax incentive schemes in this area.