The Department of Finance has turned down a request from the private company that runs the West-Link toll bridge to indemnify it against a higher tax bill when the State buys the bridge for €600 million.
The buy-out proposal comes before the Cabinet today, a day after the introduction of a ban on lorries with five axles or more from central Dublin intensified the already-severe traffic congestion on the bridge.
After a long negotiation with National Toll Roads (NTR), the Government is preparing to pay €50 million in each of the 12 years from 2008 until 2020 for possession of the bridge. The payments will be index-linked to inflation.
However, the Department of Finance ruled out giving any indemnity to NTR in respect of the taxation of its income from the bridge. NTR's income is currently taxed at the standard 12.5 per cent rate of corporation tax and it wanted an indemnity against a higher effective rate should the buy-out payments trigger any capital gains tax liability.
The bridge is likely to revert to the State in mid-2008. The Government hopes that the introduction of barrier-free tolling at that time and the completion of two new lanes on the M50 will relieve congestion on the West- Link.
NTR came under pressure from Dublin City Council yesterday to take steps to ease congestion on the bridge in light of the council's ban on five-axle vehicles from the city centre. The heavy goods vehicle ban lessened traffic in the city centre - particularly on the quays - but roads approaching the city were at a standstill yesterday morning. The M50 was worst affected, with hour-long tailbacks from the M1 intersection through to the Lucan exit near the West-Link.
The council has asked the National Roads Authority, the State body with responsibility for roads, if NTR would consider mitigation measures to reduce the potential for congestion at the toll plaza by changing the configuration of the lanes.
NTR conceded that traffic was particularly heavy yesterday due to the HGV ban, but said the whole of the M50, not just the West-Link, was affected. It would not say if it would alter operations at the toll bridge.