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Finance Bill puts VAT on many services

Waste collection - Bin charges set to increase
Waste collection - Bin charges set to increase

The Government has published the Finance Bill, which gives legal effect to measures announced in December's Budget.

Finance Bill 2010
The Explanatory Memo
List of Items

Some of the measures contained in the Bill include the scrapping of a number of tax reliefs.

A tax relief on service charges is to be abolished, though this will not come into effect until 2012.

The Bill also includes measures to extend VAT to cover public bodies, including local authorities.

This will cover areas such as waste collection and recycling services and is a response to a European Court of Justice ruling last year.

The levy on life assurance premiums introduced last year is being removed from pension products in order not to discourage investment in pensions.

The Government is also to bring in legislation covering transfer pricing in order to regulate the trading of goods and services between subsidiaries in the same group of companies.

This is aimed at preventing companies from under-stating their Irish profits for tax purposes.

Revenue has also been given additional powers by some of the measures.

The National Asset Management Agency (NAMA) will be required to provide the tax authorities with information to ensure that property deals are correctly dealt with for tax purposes.

The extension of VAT to local authorities' waste collection activities is likely to lead to higher charges for bin collection.

Other areas covered by the VAT extension to local authorities include recycling services, off-street parking and the operation of leisure facilities. This is because private providers of such services have to charge VAT.

However, the Department of Finance has stressed that education, health, water and transport services are not covered by the VAT changes.

Fine Gael Finance Spokesperson Richard Bruton has said the Bill was merely a tinkering exercise and contained nothing that would help stem the tide of unemployment.

Labour Finance Spokesperson Joan Burton said ordinary families would be dismayed to find themselves paying more for important services while

Sinn Fein's Arthur Morgan said it was a lightweight measure that would not provide the revenue to get Ireland out of recession.

Elsewhere, European Central Bank President Jean Claude Trichet has said 'the decisions taken by the Irish Government have been very impressive.'

Asked to comment on Finance Minister Brian Lenihan's statement that the worse is behind the country, Mr Trichet said: 'We all have to remain alert. This is no time for complacency.'