Written answers

Tuesday, 11 December 2007

Department of Health and Children

Hospitals Building Programme

9:00 pm

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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Question 312: To ask the Minister for Health and Children the cost of co-located private hospitals to the Exchequer with a breakdown of the cost for each of these hospitals; the amount of tax relief involved with these hospitals; and if she will make a statement on the matter. [34194/07]

Photo of Mary HarneyMary Harney (Dublin Mid West, Progressive Democrats)
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There will be no direct capital cost to the State arising from the co-location initiative. There will be a loss of private health insurance income to the hospitals from private health insurers. This is estimated at €79 million in respect of the six sites where the co-location initiative is most advanced, as follows — Waterford Regional Hospital €11m, Cork University Hospital €18m, Sligo General €8m, Limerick Regional €17m, St James €14m, Beaumont €11m. I consider that this is a small price to pay in order to free up 1,000 beds for public patients where the running cost of over €300 million is already being met by the State. The loss of income will be mitigated, in part, through income from the lease of the land and a potential share of profits from the co-located facility.

It is anticipated that the private developers will avail of the scheme of capital allowances under the Finance Acts. The level of tax relief depends on the financing arrangements for each hospital and it is not possible, at this stage, to provide a breakdown of potential capital allowances by hospital site. However, it should be noted that not all costs are eligible for tax relief under the scheme. The Government's consideration of the initiative assumed a capital cost of €1 million per bed. It is anticipated that for each €1 million in allowed capital expenditure, most relief will be claimed at the 41% income tax rate plus any allowable PRSI-related relief, spread over 7 years, and not taking account of tax buoyancy effects. This is still less than the capital cost to the State of building and commissioning an additional 1,000 new beds for public patients.

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