Tax relief for profit-sharing and the start of a move to full individualisation of tax bands will form part of the Finance Bill when it is released today. The Minister for Finance may also put forward some measures to apply full interest and penalties on the banks for non-payment of DIRT.
However, as expected, it is understood that the Minister will not be able to impose a levy on the banks, recommended by the Dail Committee of Public Accounts (PAC) following its investigation into the evasion of DIRT. Labour's spokesman on finance, Mr Derek McDowell, said last night that the Government would have to outline how it would implement the bank levy. "The Government cannot duck this important recommendation because of legal technicalities. If statutory or constitutional obstacles to the imposition of the levy have been identified, the Government must outline the steps it will take to overcome these obstacles to ensure that the banks pay the penalty for their role in the DIRT scandal," he said.
On the application of interest and penalties, the Department has been in discussions with the Attorney General's office about the details of the statute of limitations, which generally allows penalties to apply only up to a 10-year period.
This 10-year limit is normally waived in cases of fraud. It is not clear yet what the outcome of those negotiations were. Asked yesterday, Mr McCreevy simply said it would be clear when the Bill was published today. The software industry is also likely to be disappointed if the Bill does not reduce the standard VAT rate of 21 per cent to foster e-commerce in the Republic. The issue has been examined as part of a study, commissioned by Forfas, IDA Ireland and Enterprise Ireland, on foot of growing concern that the existing VAT rate is a disincentive to companies choosing the Republic in which to set up or do business.
The profit and gain-sharing measures, which will implement the private sector part of the new national wage agreement, will ensure that profit or gain-sharing is open to the wider membership of each organisation. The Bill is also expected to make changes to the ability of the Revenue Commissioners to examine the unpaid tax liabilities of the banks, with a view to extending the period. The possibility of the Revenue bringing in outside auditors to assist in this process is also being examined. However, it is possible that this may be put off until next year's Budget.
The PAC recommended that the Revenue Commissioners should undertake a full look-back audit to April 1986 of each financial institution to assess DIRT liability, with the cost of the audit to be borne by the financial institution being examined and the exercise to be completed by September 1st, 2000. The Bill will also finalise the preliminary list of measures published two weeks ago, many of which were designed to streamline tax administration and reduce the regulatory burden. Measures to set up a tax-designated town renewal scheme, the joint assessment of spouses and further changes to capital acquisitions tax are among the most significant new proposals.
The Bill will also implement income tax individualisation and other tax measures set out in the Budget. It includes the additional £3,000 tax allowance for stay-at home spouses announced shortly after the Budget. However, Mr McCreevy refused yesterday to confirm that the tax bands for a single person would move to £28,000 as outlined in his December Budget. "It depends on the economic and other circumstances at the time," he said.
