Joe Costello (Dublin Central, Labour)
Link to this: Individually | In context

Question 298: To ask the Minister for Finance if he will abolish the punitive €10 passenger air travel tax; if the opening of Dublin Airport's Terminal 2 on Friday, 19 November 2010 would not be a suitable occasion to make such an announcement; and if he will make a statement on the matter. [42738/10]

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

I do not accept that the air travel tax has a material impact on tourism numbers. Prospective visitors will base their choice of destination on a range of issues. These will include the cost of travelling to a destination but are more likely to be influenced by the cost structure within that destination, and the range of activities and visitor attractions on offer. However, taking account of some of the comments made last year, I announced in the Budget a single revised rate of air travel tax of €3 with effect from 1 March 2011 and will assess the impact of this to see if passenger numbers are affected.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Question 299: To ask the Minister for Finance the cost of retaining patent relief as a more targeted tax concession, perhaps by capping the benefit or in other ways; and if he will indicate whether a cost-benefit analysis of the charge has been undertaken [1421/11]

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

The tax exemption for patent income has been in place for over 30 years and has applied to income received by an individual or company from a qualifying patent subject, since 2008, to an annual limit of €5 million. A tax exemption has also applied, subject to certain conditions, to distributions paid by companies from exempt patent income. These exemptions have been abolished with effect from 24 November 2010. The decision to abolish the relief was taken in the light of a recommendation to this effect by the Commission on Taxation. As part of its review of all tax expenditures, the Commission on Taxation examined the relief for patent income to determine if its continued operation was justified on cost benefit grounds. The Commission found that the relief has not had the desired impact on innovation and R&D activity and that, despite various refinements to the scheme over the years, it was not a particularly well-targeted measure providing good value for money.

The Government agrees with the conclusions of the Commission and believes that in the current challenging times scarce resources should be focussed instead on the R&D tax credit scheme. The R&D credit scheme provides a more direct and effective incentive for enterprises to innovate and invest in R&D activities and the scheme has been enhanced considerably in recent years to make it one of the most competitive of its kind anywhere.

Abolition of the patent income exemption will yield €50 million to the Exchequer in a full year and this is provided for in the National Recovery Plan. Alternative options for curtailing the relief were considered in the context of the Plan, such as limiting the tax free payment to a fixed amount per annum. While capping the benefit or restricting it in other ways, as suggested in the question, would provide some savings, it would still mean a significant cost to the Exchequer and would be difficult to justify on the basis that it would provide tax-efficient means for remunerating employees.

It was not considered necessary to undertake a cost benefit analysis for the abolition of this exemption as it was included in the Commission on Taxation review of tax expenditures on which the Commission made a recommendation.