Finance Bill hits the right balance- It has real substance that will pay dividends in years ahead

"The Finance Bill, 2010 hits the right balance. It contains measures that enhance Ireland’s attractiveness as a place to do business & to create jobs and continues the task of stabilising Ireland’s public finances” Minister for European Affairs Dick Roche told Dail Eireann.

The Bill’s provisions will:

Assist innovation, research and development, areas of particular importance in terms of creating long term sustainable employment.

Enhance the existing tax treatment of dividends received by companies here aimed at increasing the attraction of Ireland for economic activity in general.

Improve Ireland’s capacity to operate as an innovation hub through a number of detailed provisions.

Improve Ireland’s ability to attract high skilled individuals who are innovators in their own field and who will act as magnets to attract economic activity and through a series of measures will,

Enhance Ireland’s attractiveness as a base for internationally-traded services, particularly financial services.

These changes will not have an overnight effect but they do prepare Ireland for the period ahead.

The Finance Bill also contains a number of more down to earth measures which I believe will be widely welcomed.

The extension of the existing scheme of tax exemption for new start up companies to businesses that commence trading in 2010 is something that we should all welcome.

I want in particular to welcome the measures providing for the car scrappage scheme. We all know that this industry has been on its knees. The measures which were introduced in the budget have already had a positive effect and people in the industry tell me that the scheme has already had a stabilising effect. In addition to the

The extension of Mortgage Interest Relief for qualifying loans to the end of 2017 will be welcomed by hard pressed mortgage holders. Mortgages holders who find themselves will also welcome the steps taken by the Minister for Finance to extend the time provisions in the Code of Conduct on mortgage arrears.

I also want to welcome the idea of creating a National Solidarity Bond. The provisions of the Finance Bill will facilitate the introduction of such a bond.

The bond is a very good idea. At present people are saving at unprecedented levels. While this has had the effect of depressing demand, it seems o me that if savings are available that they be used to enhance the productive capacity of the state. A Solidarity Bond managed by the NTMA would clearly be of more benefit to society as a whole than a speculative investment by Banks or Financial Institutions whose sole focus is private wealth rather than the general public’s good. I look forward to details of the Solidarity Bond being published.

Another novelty in the Finance Bill which should be mentioned is the introduction of a domicile levy of €200,000 on all Irish domiciled individuals who are Irish citizens. This will ensure that the super wealthy will make a contribution to the state. Persons liable to the levy will have to pay it regardless of where they live or where they are tax resident. It would be very interesting to see how this particular novel arrangement works out.

Ministers for Finance are not known for their flexibility. This Minister is an exception to that rule – he is willing to listen.

The Minister was wise, in my belief, to reduce the standard rate of VAT from 21.5% to 21%. He made it clear, something which is unique for a Finance Minister that he had had second thoughts about the slight increase in the VAT rate and his change of heart in this area is very welcome.

I also welcome the Minister’s decision to remove the Life Insurance Levy on pension products. Over the last 12 months I became aware of concerns that the levy could discourage investment in pensions. It is critical that investment in pensions be encouraged. Ireland like the entire world’s developed nations face a reality that population age is increasing. Against this background investment in pensions must not be discouraged. The decision taken by the Minister is wise and one that will have a positive impact. Flexibility is a sign of strength – not a weakness.

The Finance Bill is business like but it also includes some very worthwhile innovations. It meets all of the requirements which I outlined at the outset. It contains measures which are well balanced it will help us to deal with a very challenging economic position; it reverses some previous policies and prudently extends others. Unlike many of the Opposition proposals this Bill has real substance that will pay dividends in the years ahead” – Minister Roche said.