The planned private day-case hospital near Naas which received a major tax break through an amendment to the Finance Bill on Wednesday may be the first of up to seven such facilities to be built, the Department of Finance believes.
An internal memo released by the Department yesterday backs up the statement by the Minister for Finance, Mr McCreevy, in the Dáil on Wednesday defending the decision to give a generous tax break to the promoters of the Naas project.
Mr McCreevy acknowledged to the Dáil that the proposal to give capital tax allowances to private day-case hospitals first emerged at a meeting between him and a constituent, who was one of the promoters of the Naas project. However, he said, the change was consistent with the Government policy of encouraging private health development.
According to the Finance memo, the Department believes that seven such private hospitals, each capable of carrying out at least 40 day-case procedures on patients per day, may be developed and could take pressure off established acute hospitals. These hospitals would take advantage of the new tax break which allows the developers write off the entire capital cost of the projects against tax over seven years.
Opposition parties have claimed that the tax break was given as a favour to a constituent of Mr McCreevy.
However, the departmental memo, written to the Minister by officials who met the promoters of the Naas project on February 24th, shows the officials saw some merit in the plan. It also says that the Department of Health "accept that the extension [of capital tax relief] is a natural development from the original relief for private in-patient hospitals."
The memo says that such a facility could take pressure off normal hospitals through dealing with a large number of patients. It did not recommend whether or not the tax relief sought should be granted, concluding only that the Minister might wish to discuss the matter with his officials.
The February 24th meeting led to Wednesday's amendment to the Finance Bill, giving generous capital tax allowances to those who build private hospitals with 40 or more beds for day-case and outpatient medical and surgical services. It follows the introduction of such allowances in recent years for private hospitals with 70 or more in-patient beds, nursing homes, sports injury clinics and housing for the aged and infirm.
According to the official memo, the promoters of the Naas project thought there would be a demand for only four such hospitals outside Dublin. "If one assumed that there could be three in Dublin, this would mean seven in all," it said.
The Naas project would involve the construction of a 40,000-50,000 sq ft building at a cost of €22 million, excluding land. The promoters hope to begin construction around August 2003 and have the building finished by the start of 2005, the memo says.
Mr McCreevy confirmed to the Dáil on Wednesday that after he met one of the promoters last November, he arranged for the promoter to meet his officials, a meeting which did not take place until February 24th.
According to the memo, the Department estimates that if seven such hospitals were built at the same cost as the Naas one, the Exchequer would forgo an annual €9 million in tax over seven years. "However, there would be some offsetting savings on the Health vote if the scheme led to savings in the hospital buildings programme or elsewhere."