Ruairi Quinn (Dublin South East, Labour)
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Question 48: To ask the Tánaiste and Minister for Finance if he will estimate the annual cost to the Exchequer of the scheme for accelerated capital allowances for energy efficient equipment proposed in the Finance Bill 2008; and if he will make a statement on the matter. [7729/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Under the proposed scheme of accelerated capital allowances for expenditure on specified energy-efficient equipment, companies will have the benefit of writing-off the full cost of such equipment against their taxable income in the year the expenditure is incurred. Under existing arrangements, companies benefit from wear and tear allowances on the cost of such equipment at a rate of 12.5% per annum over a period of 8 years where the equipment qualifies as plant and machinery.

The additional cost to the Exchequer in terms of tax revenue foregone arising from this incentive will depend on the extent to which it encourages more companies to invest in the specified energy-efficient equipment than would do so in the absence of the accelerated allowances. As this will depend on the take-up of the incentive, it is not feasible to provide a precise estimate of this cost. By way of illustration, however, if as a result of this incentive 5,000 additional items of qualifying energy-efficient equipment were purchased than would otherwise be the case under each class of technology, then assuming expenditure at the minimum qualifying amount for the equipment in each class, the additional cost in tax foregone would amount to about €6 million over the proposed lifetime of the incentive. In order to contain Exchequer costs, however, this incentive will only be available to the corporate business sector and it will operate for a period of three years.

It should be borne in mind that there will also be benefits and savings to investing companies as well as the economy and the environment generally, from the increased use of energy-efficient equipment. Putting a monetary value on these benefits is not a simple matter, but this incentive should be viewed in the nature of a "pump priming" exercise which will operate over three years. It is hoped that over time companies and business will see the ongoing value of investing in energy-efficient equipment in terms of the improved economic returns to themselves as well as the environmental benefits to society, generally.