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 Header Item Financial Resolution No. 1: Excise Duties on Mechanically Propelled Vehicles (Continued)
 Header Item Financial Resolution No. 2: Capital Allowances

Tuesday, 13 October 2015

Dáil Éireann Debate
Vol. 892 No. 4

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Deputy Joe O'Reilly: Information on Joe O'Reilly Zoom on Joe O'Reilly I support the measure as a Deputy from a Border constituency where this is an extraordinarily important matter. In that regard I agree with my constituency colleague, Deputy Ó Caoláin. It is very important for our area. The area no longer has a rail network, so the local hauliers are a critical part of its economic infrastructure. They are substantial employers in their own right, are vital to small business in the area and they do a great job. This measure will make it easier for them to function.

I pay tribute to the hauliers. Some of them are in the House tonight to hear the good news and I have spoken to them outside the Chamber. A number of them are from my constituency. They are extremely happy with the news of this initiative. I am delighted to support it as an exercise in achieving fairness, as well as for the retention of jobs and further job creation. It is a good measure for our area. It is a good news story and a sensible piece of economic engineering that will work for the area.

Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming I support this financial resolution. Most Deputies throughout the country have been contacted in the last couple of months by various companies in the haulage business. I appreciate the fact that they contacted us, ran a good campaign and stated their case very clearly. Some of us were shocked at the anomalies between the North and the South when they told us what they were. That helped, because we cannot know everything about every business unless somebody approaches us about it.

In simple English the rate of motor tax has been reduced for all vehicles over 4,000 kg, which is four tonnes in my language and the language of many others. There is a new annual rate of €500 for vehicles between four tonnes and 12 tonnes and a rate of €900 for vehicles over 12 tonnes. That will be appreciated. Many haulage companies in Ireland operate on an all-island basis, travelling back and forth to the Six Counties, and across the channel in competition with haulage companies from Northern Ireland. We are all aware of the difficulties many of them experienced at Calais over the summer, and they approached us about that second issue too. They felt people did not appreciate their difficulties.

It is good the Minister has brought forward this measure and I am pleased to support it. It will be well received.

Deputy Brendan Griffin: Information on Brendan Griffin Zoom on Brendan Griffin I add my voice in support of this resolution. It is a progressive step in this budget, one of many. I commend the Department of Finance, the Ministers and the Minister for Transport, Tourism and Sport, Deputy Donohoe, for their support on this. It is a pro-business and pro-consumer measure. It will reduce the cost of goods for everybody. When one looks at the figures and sees the huge difference that existed between operators north and south of the Border, it obviously had to be addressed. I am glad the Government has listened, met with the people involved and delivered this measure. The Border counties have been mentioned, but this will benefit business in every corner of the country.

In addition, as the economy recovers, there are many people who previously were not in a position to put a vehicle on the road for 12 months of the year. They operated on a week on and week off basis and did not have full-time work, because they were absolutely hammered with these overheads. This is a major boost to those people. I welcome it as a very progressive step.

The Taoiseach: Information on Enda Kenny Zoom on Enda Kenny I thank the Deputies for their comments. Clearly, the Irish Road Haulage Association has made this case for a number of years. There was a serious imbalance in terms of competitiveness and many hauliers were inclined to register elsewhere and avail of the cheaper taxes as a consequence.

The Government has listened carefully to the haulage business. That business shifts the vast majority of goods exported from, and imported to, this country. It is a critical element of our economic progress and the economic rise in confidence. From that perspective, it is important that it be understood that the Government has been very much open to business in the interests of business. That is to continue the drive to strengthen our economy and as a consequence to create jobs and have an engine to deal with the social challenges we face.

Deputy Troy raised the issue of tyres. Obviously, that is an issue. Irrespective of how expensive or big the vehicle is, be it a car or lorry, the only point of contact with the road is through the tyres. Clearly, one cannot mess around with them. One must have good tyres. From an environmental perspective, waste tyres can have a devastating impact on emissions depending on what is done with them. I am aware of the industries the Deputy mentioned. The Department of the Environment, Community and Local Government is working on a producer-led scheme to mitigate the waste. The points the Deputy mentioned in respect of the meetings he had are well understood. Obviously there is some work ongoing in that regard.

An interdepartmental committee has been established to address the implications of introducing a pay-as-you-go road tax system for heavy goods vehicles. The group is reviewing the way commercial motor tax is assessed and charged. The work of the group has been expanded to include a review of the existing commercial motor tax regime and consideration of the current system of classifying commercial vehicles for motor tax purposes. The work of the group is ongoing.

This measure will be welcomed by hauliers and truck drivers throughout the country. They will see in it a recognition of the valuable work they do for our economic development and expansion. It is a recognition, in part, of the difficulties and imbalance in competitiveness they faced as well as a recognition of the work they do. I thank the Deputies for their support for the resolution.

Deputy Robert Troy: Information on Robert Troy Zoom on Robert Troy I thank the Taoiseach for acknowledging the point I raised, but I am not sure if he is aware that it is causing much concern and worry for the tyre industry. We welcome the resolution brought before the House as it will reduce costs for hauliers. However, while everybody is anxious that tyres are recycled in a proper and appropriate manner, the new monopoly the Department of the Environment, Community and Local Government is forcing through in respect of the recycling of tyres through Repak and WEEE, without going to tender, will result in a considerable increase in the cost of tyres for hauliers. We are giving to the hauliers with one hand, but we are taking it back with the other.

I acknowledge the Taoiseach is taking on board what I said and I hope he will use his good offices to convey to the Department of the Environment, Community and Local Government that it must engage with the two representative bodies to bring about a satisfactory resolution to the stand-off that currently exists.

  Financial Resolution No. 1 agreed to.

Financial Resolution No. 2: Capital Allowances

The Taoiseach: Information on Enda Kenny Zoom on Enda Kenny I move:

(1) THAT for the purposes of the State Aid de minimis rules the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended with effect from 13 October 2015 as follows –
Industrial building allowances: aviation services facilities

____.The Principal Act is amended –
(a) in section 268 –
(i) in subsection (1F), by substituting “then, notwithstanding that subsection, that capital expenditure shall not, as regards a claim for any allowance under this Part by any such person, be regarded as specified capital expenditure for the purposes of this Part,” for “then, notwithstanding that subsection, that building or structure shall not, as regards a claim for any allowance under this Part by any such person, be regarded as an industrial building or structure for the purposes of this Part,”,

(ii) by substituting the following for subsection (5A):

“(5A) Subject to subsection (5C), expenditure incurred by a person on the construction of an industrial building or structure (within the meaning of subsection (1)(n)) shall be treated as specified capital expenditure for the purposes of this Part─
(a) only to the extent that the aggregate of such expenditure does not exceed─
(i) €5,000,000, where the person concerned is a company, and

(ii) €1,250,000, where the person concerned is an individual,
and

(b) where the following information has been provided to the Revenue Commissioners before the first claim for a writing-down allowance is made, in accordance with section 272, by the person:
(i) the name, address and tax reference number (within the meaning of section 477B(1)) of the person making the claim;

(ii) the address of the building or structure in respect of which the expenditure was incurred or deemed to have been incurred;

(iii) details of the aggregate of the amount of such expenditure which has been incurred or deemed to have been incurred by the person making the claim.”,
(iii) in subsection (5B) –
(I) by substituting “subsection (5A)(b)” for “subsection (5A)(c)”, and

(II) by substituting “necessary to ensure compliance with the provisions of this Part and any European Commission guidelines, regulations or other reporting requirements, as the case may be, that may be relevant.” for “reasonably related to achieving the following objective.”,
(iv) by substituting the following for subsection (5C):
“(5C) Where capital expenditure has been incurred, or deemed to have been incurred, on the construction of an industrial building or structure (within the meaning of subsection (1)(n)) by 2 or more persons, being either individuals or companies, or both, the amount of such expenditure which is to be treated as specified capital expenditure for the purposes of this Part shall, if necessary and notwithstanding section 279, be reduced such that the amount determined by the formula─

(A x 50 per cent) + (B x 12½ per cent)

does not exceed €625,000, where –

A is the aggregate of all such specified capital expenditure which has been incurred, or deemed to have been incurred, by the individual or individuals concerned, and

B is the aggregate of all such specified capital expenditure which has been incurred, or deemed to have been incurred, by the company or companies concerned.”,
(v) by deleting subsections (5D) and (5E),

(vi) in subsection (9), by substituting the following for paragraph (k):
“(k) by reference to paragraph (n), as respects─
(i) specified capital expenditure incurred in the period commencing on the date of the coming into operation of section 31 of the Finance Act 2013 and ending on the fifth anniversary of that date, and

(ii) capital expenditure other than specified capital expenditure incurred on or after the date of the coming into operation of section 31 of the Finance Act 2013.”,

and
(vii) by inserting the following after subsection (11):
“(11A) Notwithstanding any other provision of this Part, capital expenditure which has been incurred on the construction of an industrial building (within the meaning of subsection (1)(n)) shall not be treated as specified capital expenditure where any part of that expenditure has been or is to be met, directly or indirectly, by grant assistance or any other assistance which is granted by or through the State, any board established by statute, any public or local authority or any other agency of the State.”,

(b) in section 272─
(i) by substituting the following for paragraph (k) of subsection (3):
“(k) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (n) of section 268(1)─
(i) 15 per cent of the expenditure referred to in subsection (2)(c), if that expenditure is specified capital expenditure, and

(ii) 4 per cent of the expenditure referred to in subsection (2)(c), if that expenditure is not specified capital expenditure.”,

and
(iii) by substituting the following for paragraph (k) of subsection (4):
“(k) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (n) of section 268(1)─
(i) where the expenditure is specified capital expenditure, 7 years beginning with the time when─
(I) the building or structure was first used, or

(II) where the expenditure is incurred on refurbishment, the building or structure was first used subsequent to the incurring of that expenditure,
and

(ii) where the expenditure is not specified capital expenditure, 25 years beginning with the time when─
(I) the building or structure was first used, or

(II) where the expenditure is incurred on refurbishment, the building or structure was first used subsequent to the incurring of that expenditure.”,
(c) in section 274(1)(b) by substituting the following for subparagraph (x):
“(x) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (n) of section 268(1)─
(I) where the expenditure is specified capital expenditure─
(A) 7 years after the building or structure was first used, or

(B) where the expenditure is incurred on refurbishment of the building or structure, 7 years after the building or structure was first used subsequent to the incurring of that expenditure,
and

(II) where the expenditure is not specified capital expenditure─
(A) 25 years after the building or structure was first used, or

(B) where the expenditure is incurred on refurbishment of the building or structure, 25 years after the building or structure was first used subsequent to the incurring of that expenditure.”.
and

(d) in Schedule 25B –
(a) by substituting the following for clause (VIII) of paragraph (a)(i) of the matter set out opposite reference number 13:
“(VIII) section 268(1)(n) (inserted by the Finance Act 2013) to the extent that the writing-down allowances are referable to specified capital expenditure (within the meaning of section 268),”,
and
(b) by substituting the following for clause (VIII) of paragraph (a)(i) of the matter set out opposite reference number 15:

“(VIII) section 268(1)(n) (inserted by the Finance Act 2013) to the extent that the balancing allowances are referable to specified capital expenditure (within the meaning of section 268),”.
(2) THAT section 31 of the Finance Act 2013 be amended by substituting the following for subsection (2):
“(2) This section comes into operation on 13 October 2015.”.
(3) THAT section 33 of the Finance Act 2014 be amended by substituting the following for subsection (2):
“(2) This section comes into operation on 13 October 2015.”.
(4) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

In the budget of 2013 a scheme of accelerated industrial buildings allowances for certain aviation services facilities linked to the main aviation sector was announced. The scheme focuses on the construction and refurbishment of buildings and structures which could be used for the maintenance, repair and overhaul of commercial aircraft and the dismantling of such aircraft for the purposes of salvaging or recycling parts and materials. The relief, which provides for a seven year write-off for this capital expenditure, will operate for five years and is subject to all the normal rules for capital allowances. It was subject to a ministerial commencement order, principally to allow time to obtain European Commission approval for the scheme from a state aid perspective. In other words, it had to be in compliance with that regime.

  I am happy to report that the discussions between the Commission and the officials of the Department of Finance have now been successfully concluded and this scheme will now take immediate effect, subject to a number of modifications which will be introduced by this financial resolution. The key change is to place an upper limit of €200,000 on the actual value of the relief available in any three year period for each individual project. This is to conform to EU state aid de minimis guidelines. In the case of a company, for example, this equates to overall construction expenditure of €5 million. The limit is on the amount of relief given, not on the amount of expenditure incurred.


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