Finance Minister Brian Lenihan has announced changes to the income levy announced in the Budget. The changes are in the Finance Bill published this afternoon, which gives effect to changes announced in the Budget.
A levy of 1% will still apply to income up to €100,000 a year, with 2% for income above that. But under the Bill, an extra 1% will be paid in income above €250,120, but those on low incomes - below €18,304 - will be excluded. Social Welfare recipients and medical card holders will be exempt from the levy.
Minister Lenihan said 20% of the total yield of this levy would come from those paying the top 3% rate and this demonstrated its fairness.
The end of the 'Cinderella' clause
The Bill also brings to an end the so-called Cinderella clause, where wealthy people can fly into and out of Ireland on one day to avoid paying tax. Mr Lenihan says such loopholes are not acceptable in the current economic climate.
Under the new measures, all visits to Ireland by non-residents for tax purposes will be counted against their permitted days in the country. Minister Lenihan said it was difficult to assess how many 'super rich' would be affected by this change. He said it was a behaviour modification issue.
Other measures
More detail has also emerged about the car parking levy for employees with free car parking spaces provided by their employers.
It will apply in the County boroughs of Limerick, Cork, Waterford, Dublin and Galway. The Minister says the Finance Bill gives him the power to designate which parts of these boroughs will have the levy applied.
He said he would into account take the degree of public transport available and the level of congestion in these areas, when deciding where the levy should be applied. The levy will not be charged to employees who already pay for a space.
The Bill also includes improved tax breaks for companies investing in research and development, including allowing part of the money spent on buildings used in part for R&D to qualify for a tax break. Currently, such buildings must be used exclusively for R&D.
Following concerns about the number of cars being imported from Britain and the North, the Bill will mean an NCT assessment must be carried out on such vehicles before they are registered in Ireland. The Department says this is to ensure the cars are correctly registered, with the aim of reducing the number of vehicles that may be fitted with extras that are not currently declared.
In addition, vehicles brought into the State for more than 42 days will have to be temporarily registered in the State.
The Government has also announced changes to the proposed airport departure tax. The rates will remain the same - €10 per passenger with a lower rate of €2 for shorter air journeys.
But the €2 charge will now apply to departures from any Irish airport where the destination is 300km or less from Dublin airport. The move is in response to concerns raised by airports along the western seaboard who felt aggrieved at the original plan, which would have seen their passengers pay more than those leaving from Dublin on short trips.
The Bill also includes measures aimed countering tax avoidance schemes. One such scheme may allow artificial losses to be generated. These can then be used to shelter real capital gains.
Measures will also be brought in to counter a scheme designed to avoid stamp duty by using 'exchanges' of property as opposed to a sale.
The rate of tax for inheritances and gifts is being increased from 20% to 22%.
