I will focus on far less-discussed Explanatory Memorandum:
- confirms that "the income levy rates in force in the first four months of the year will apply to redundancy payments made up to 30 April 2009" - so DofF has venally gone after people who lost their jobs and was forced to step back. No worries, they'll get you in some other ways. But this means that the DofF projections for €754mln in 2009 due to be raised out of income levies is now looking more like my predicted (here) €714mln.
Yes, Brian, you should have sent Lenihan to Economics 101...
- "Section 5 amends section 97 of the Taxes Consolidation Act 1997 in relation to the extent to which interest on borrowed money used to purchase, improve or repair a rented premises can be deducted in computing the amount of taxable rental income. Where the borrowed money is used to purchase, improve or repair a residential premises, 75% of the interest on the borrowings can now be deducted instead of the normal 100%".
Yes, Brian, you should have sent Lenihan and DofF to Economics 101... preferably not taught by Alan Ahearne...
- "Section 6 amends section 644A of the Taxes Consolidation Act 1997 (which deals with the income tax treatment of income arising from dealing in residential development land) by providing for the abolition of the 20% incentive rate of income tax on such income, with effect from the 2009 tax year. From 2009 onwards such income will be taxed under normal income tax rules. The section also inserts a new section 644AA into the Taxes Consolidation Act 1997 [on] certain trading losses arising from a trade of dealing in residential development land where if profits had been earned the profits would have qualified for the 20% incentive rate of income tax. Under normal income tax rules, a loss sustained in a trade may be set ... against the person’s other income. In the case of losses sustained in a trade of dealing in residential development land, ...such losses (sustained in a trade in which if profits had been made would have been taxed at 20%) could be set against the person’s other income taxable at the higher 41% rate. The new section provides that such losses must first be converted into a tax credit, valued at 20% of the loss, and then allows the tax credit to be set sideways in the year the loss is sustained
against tax payable on the person’s other income."
But again, an added here is a bonus insight into Brian's economic illiteracy. The banks and corporates are overloaded with bad loans at this time. Much of it is collateralized on or lent on development land. If we were to force the banks to take serious writedowns and to see developers do so as well, why are we introducing a 50% penalty for them to do this? Brian is creating zombie land banks in return for a couple of hundred of euros he might claw back from a handful of forced sales of land. This is (a) going to haunt us for a long period of time, and (b) bodes poorly for the prospect of NAMA not generating the same...
- Finally, where a claim for terminal loss relief (i.e. on the permanent cessation of a trade) has not been made to and received by Revenue before 7 April 2009, the new section restricts the relief so that any part of the terminal loss that relates to a loss sustained, before 1 January 2009, in a trade of dealing in residential development
land is ‘‘ring-fenced’’ and can only be set against income arising in that trade, or in that part of a trade, in prior years.
In contrast, Section 8 allows for a close-off period for nursing homes incentives scheme phase-out. Why not for development land, Brian? After all, what's more toxic and needs to be written off faster and in a more orderly fashion?
In further contrast, here is a fair treatment:
- Section 11 abolishes the effective 20% rate applied to trading profits from dealing in residential development land with effect from 1 January 2009. An accounting period that straddles that date is treated for this purpose as two accounting periods. Profits or gains on dealing in residential development land will now be charged at the general rate of corporation tax that applies to dealing in land, which is 25%.
- Section 7 amends section 372AW of the Taxes Consolidation Act 1997 which relates to the Mid-Shannon Corridor Tourism Infrastructure Investment Scheme. One of the conditions of this tax incentive scheme is that the Mid-Shannon Tourism Infrastructure Board must grant approval in principle for investment projects in advance of expenditure being incurred. At present an application for such
approval in principle must be made within one year of the commencement of the Scheme, i.e. by 31 May 2009. This amendment extends the period during which such applications can be made from one year to two years so that the latest date for the submission of applications is now 31 May 2010. Under the Scheme, the current period within which expenditure must be incurred for capital allowances purposes is the three-year period commencing on 1 June 2008 and ending on 31 May 2011. To cater for any projects that may avail of the new date for the submission of applications for approval in principle, this period is also being extended and will now end on 31 May 2013.
Down to the part where Brian extorts the money out of the ordinary folks:
- Section 9 increases Deposit Interest Retention Tax by two percentage points with effect from 8 April 2009. Section 10 increases the rates of tax applying to life assurance policies and investment funds by two percentage points with effect from 8 April 2009. Section 14 gives effect to the proposal announced in the Budget statement to increase the rate of capital gains tax from 22% to 25% in respect of disposals made from midnight on 7 April 2009. Section 15 confirms the Budget increase in the rate of Mineral Oil Tax on auto-diesel which, when VAT is included, amounts to 5 cent on a litre. Section 16 confirms the Budget increases in the rates of Tobacco Products Tax which, when VAT is included, amount to 25 cent on a packet of 20 cigarettes with pro-rata increases on other tobacco products.
- Section 22 provides for an increase in the current non-life insurance levy by 1 per cent to 3 per cent and for a new 1 per cent levy on life assurance policies. The increase in the non-life levy applies to premiums received on or after 1 June 2009 in respect of offers of insurance or notices of renewal of insurance issued by an insurer on or after 8 April 2009. The new levy on life assurance policies applies to premiums received on or after 1 August 2009 in respect of life assurance policies whenever entered into by an insurer.
- Section 23 gives effect to the proposal announced in the Budget statement to reduce the current tax-free thresholds from \542,544 (Group A — broadly speaking, from parent to child), \54,254 (Group B — broadly speaking, between siblings, from children to parents, from grandparents to grandchildren, and from uncles and aunts to nephews and nieces) and \27,127 (Group C — all cases not covered by Group A and Group B) to \434,000, \43,400 and \21,700 respectively. The section also increases from 22% to 25% the rate of tax in respect of gifts or inheritances taken after midnight on 7 April 2009.
I certainly hope that during his ''road show' selling Ireland Inc, at least one prospective foreign investor stands up and asks him: "Minister, if you can raid your own peoples' wealth in an arbitrary and unilateral fashion such as this, what guarantees can you give us, foreigners, that you will not turn Ireland into a Zimbabwe, where property rights are adhered to only as long as it is convenient for your Government?"
And watch him avoid your gaze...