Phil Hogan (Carlow-Kilkenny, Fine Gael)
Link to this: Individually | In context

Question 85: To ask the Minister for Finance if he expects legislation to be introduced in 2008 on carbon tax; and if he will make a statement on the matter. [21196/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

As the Deputy will be aware the Carbon Tax issue is being examined by the Commission on Taxation. The Commission are due to report by September 2009, at the latest. It is open to the Commission if they wish to report prior to that date. However it seems reasonable to assume that there is unlikely to be legislation introducing a carbon tax in 2008. Notwithstanding that, as Minister for Finance, I will keep all options open in the context of preparations for Budget 2009.

James Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

Question 86: To ask the Minister for Finance if he foresees any threat to the Irish corporation tax regime; and his plans to mitigate the possible effects. [21857/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

I want to assure the House that the Government's position on our corporate tax regime is unambiguous. It is clearly stated in the Programme for Government that the 12.5 per cent rate of corporation tax will remain.

Corporate taxation matters are and will remain within the competence of Member States. Our corporation tax system is protected, in an EU context, by the principle of unanimity in taxation matters. This principle is underpinned in the Reform Treaty, so that Treaty will not undermine our national discretions in this regard in any way.

Although the Deputy does not specify what threats to the Irish corporate tax regime he has in mind, he may be referring to the Commission's technical work on a common consolidated corporate tax base (CCCTB) which has been the subject of much recent discussion.

It is important to note that there has been no political decision taken on the CCCTB at the level of the Council of Ministers. The Commission is currently undertaking an economic impact assessment of a CCCTB and I understand that a decision on whether or not to bring forward a proposal to Council will not be taken until that impact assessment has been completed later this year.

As there has not been a formal proposal, it is very difficult to assess the impact of a CCCTB on Ireland and the EU overall. The Irish position on the CCCTB is well known and I will continue to highlight the difficulties I believe such a proposal could cause for individual Member States and overall EU competitiveness. There is, I know, increasing and widespread scepticism among Member States as the Commission's technical work continues.

Seymour Crawford (Cavan-Monaghan, Fine Gael)
Link to this: Individually | In context

Question 87: To ask the Minister for Finance the cost of not plugging the avoidance scheme on stamp duty; and the reason this was deemed an appropriate policy boost tool for the housing sector. [21879/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

Section 110 of the Finance Act 2007 made provision for a charge to stamp duty where license agreements and other such arrangements are used when land is purchased for development without conveyance or transfer. The provision ensured that these arrangements will incur a Stamp Duty charge where a landowner receives a payment amounting to 25% or more of the market value or consideration concerned. Section 110 is subject to a commencement order on the basis that it would be prudent to consider the state of the housing and property market before the provision is put into place.

For this reason, my predecessor commissioned an independent study of the potential effects that such a provision may have on the market.

The Report is available for download on my Department's website at: http://www.finance.gov.ie/documents/publications/reports/2008/S110Report.pdf.

As these transactions, under current law, do not involve a liability to Stamp Duty, there is no requirement to present any documentation to the Revenue Commissioners for stamping and there is therefore no specific data on which to accurately estimate any revenue gains from commencing the provisions.

The Report also makes the point that there are no official data sources on the value of development land sales. It, therefore, gives an indicative estimate of the total value of the development land market in 2006 at c. €7bn to €8bn. Based on a technical assumption that 40% of land transactions using these arrangements, the Report estimated a potential revenue gain in 2006 of c. €251m if the provisions had been in place at that time. However, this estimate is based on the levels of activity in 2006 and, as a result, is not indicative of the revenue gain that would occur following commencement of the provisions at a later date. A more realistic figure for the revenue accruing from the provisions is in the order of €50m per annum.

It should be noted, however, that the Report recommended that, on balance the section should not be commenced at this time. In this regard, it indicates that Section 110 would have led to a rise in land prices, with a knock-on increase in house prices, especially for first-time buyers, and possibly risked exacerbating the down-turn in the property market. In addition, the Report highlighted that Section 110 would also have raised the cost to the State of PPP projects because of increased land prices.

The commencement of Section 110 of the Finance Act 2007 is kept under constant review and any further consideration of this issue has to take into account the prevailing circumstances in the housing and property markets.