Peter Mathews (Dublin South, Fine Gael)
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Question 109: To ask the Minister for Finance his plans to take consideration of small investors with high debts and low incomes who do not have any legacy relief shelter in the Finance Act; if he will amend the 25% interest deductibility restriction that applies since 7 April 2009 for these persons in view of the fact that it is forcing highly indebted investors towards insolvency; and if he will make a statement on the matter. [1215/12]

Michael Noonan (Limerick City, Fine Gael)
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The interest restriction on residential landlords introduced in the April 2009 supplementary budget was part of an urgent revenue-raising package aimed at stabilising the public finances. The reduction in the level at which interest could be claimed significantly reduced the cost of this relief to the Exchequer. I am informed by the Revenue Commissioners that the amount of tax foregone in 2009 (the latest year available) by allowing a deduction for interest on borrowings to be offset against all rental income assessable under Case V, Schedule D for both residential and commercial property was estimated at €745 million. This is a substantial outlay and increasing the relief for residential properties to 100% could result in an additional cost to the Exchequer of the order of €100 million per annum.

The context in which the 2009 measure was introduced, i.e. the need to stabilise public expenditure, still exists. Under the terms of the EU/IMF Programme of Financial Support for Ireland, the State is committed to further substantial decreases in public expenditure. Against a backdrop of significant reductions in tax expenditures in many areas to broaden the tax base, a 25% restriction on the allowable interest available to residential landlords does not seem an unreasonable measure and I have no plans to reverse the 2009 Act provision.