Jim Daly (Cork South West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

203. To ask the Minister for Finance his plans regarding alterations to the current revenue pay and file date; and if he will make a statement on the matter. [49375/13]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Under the regulations known as the “Two-Pack” which were formally adopted on 30th May 2013, a common budgetary timeline is being introduced for all Euro Area member states. Specifically:

- the draft budget for central government and the main parameters of the draft budgets for all the other sub-sectors of the general government must be published by the 15th of October each year;

- draft budgetary plans in a common format must be submitted by all Euro area Member States not in a programme of assistance; and

- the budget for the central government must be adopted or fixed upon and published by the 31st of December each year.

In light of these requirements, the Government decided to bring Budget Day forward from the first week in December to on or before the 15th of October from now on. Accordingly, I presented Budget 2014 on Tuesday, 15th October. The Government also decided that the Finance Bill should complete its passage through the Oireachtas by the 31st of December each year. One of the most critical elements of the Budget process is the accuracy of systems for forecasting potential revenue yield in the year in question prior to the Budget actually taking place.

In the context of a December Budget Day, the availability prior to the Budget of information on cumulative tax yields to the end of November gave a high degree of certainty to the estimation of potential outturn for the year. For example, cumulative tax yield to the end of November 2012 was €33.8bn, which represented 92% of the full year outturn of €36.6bn. On the other hand, cumulative yield to end September, at €26.1bn, represented only 71.3% of the eventual outturn.

The scope for unanticipated events which would lead to either a higher or lower than projected outturn is considerably increased in the context of an October Budget. In addition the ability to project future yield is compromised. Consequently, measures which would result in improvements in the availability of information or increases in the proportion of total yield already available prior to the Budget have to be considered.

The main areas where scope exists to introduce such improvements relate to the income tax Pay & File arrangements and on 11th October I initiated a consultation process on a revision of the existing arrangements.

I am aware of the concerns that have been raised and the results of this consultation process, and any other representations received, are a factor in my decision making process regarding the necessary measures to be taken.

I would reiterate that changes to the Pay and File regime are necessary as a result of the move to an earlier Budget Day, following the adoption of the Two-Pack and will provide increased certainty around the annual tax take.

Michael Creed (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

204. To ask the Minister for Finance the implication for those in the hotel industry of the capital allowances guillotine that comes into effect on 31 December 2014; and if he will make a statement on the matter. [49378/13]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The measure to which the Deputy is referring was announced by me in the Budget in December 2011 and provided for in the Finance Act 2012. This was complemented, at that time, by the introduction of an additional 5% USC charge in the form of a property relief surcharge on the use of property reliefs by certain higher earning individuals. The broad intention of these two measures was to reduce the legacy of property reliefs in line with Government policy to develop a fairer tax code. Although almost all of these property and area-based incentive reliefs have been brought to an end by this stage, unused reliefs were being be carried forward year after year into the future at substantial cost to the Exchequer. The changes which I introduced were informed by an Economic Impact Assessment into this area which was conducted by my Department and the changes received broad cross party support at the time. The details of the measure curtailing property-based accelerated capital allowances are as follows:

- It only applies to the various accelerated property and area-based capital allowances schemes. The ordinary industrial buildings allowance or the wear and tear allowance for plant and machinery are unaffected.

- The measure applies potentially to any industrial building for which accelerated capital allowances have been claimed. It is not restricted to hotels.

- Importantly, it applies only to passive investors in these schemes or to those who are deemed in law not to be actively engaged in the trade. Persons who are actively engaged in their respective trades are not affected by this measure.

- With effect from January 2015, any unused capital allowances which are carried forward beyond the tax life of the building will be lost. This essentially means that if the tax life has ended anytime up to the end of 2014, then the unused allowances are lost in 2015. If, on the other hand, the tax life of a building ends in 2016 or 2017 or later, then it is at the end of that year that the unused allowances are lost.

My intention back in December 2011, when I announced 2015 as the operative date for this measure, was to give adequate notice to those who may potentially be affected to take steps to ensure that the impact on them is minimised. The practical impact of this measure will only begin to be felt in a little over a year’s time, at the earliest. I have no immediate plans at this time to review the policy before it has even come into effect and as far as I am concerned, the measure is proportionate and will be effective in bringing to an end the legacy of these property reliefs.