Tax incentives

11 SEPTEMBER: The Government's decision to axe the carbon tax will result in higher costs to the consumer. In a reversal of the raditional "Polluter Pays" principle, we now have the "we pay to be polluted" principle. If the carbon tax is abandoned, Ireland will have to purchase more carbon credits. This bill will fall on the taxpayer. But instead of the tax money being available to the Irish government as carbon tax would be, the payment for carbon credits will leave the country.

Read the reaction in the media.



Furthermore, Irish taxpayers will pay more for not having a carbon tax. Because we will now not be getting the price signals that the carbon tax would have provided, we will continue to invest in fossil fuel dependent systems (transport, housing, industry etc.). Thus our emissions will be higher and we will pay more through our other taxes to buy carbon credits than we would have paid with carbon tax.

In April, the Government announced that even with a carbon tax, Ireland will purchase 3.7 million tonnes of carbon emissions rights per year between 2008 and 2012. The cost for this at the Government's low estimate of €10 a tonne will be €185 million. Carbon could easily be twice or three times that. This bill will now rise substantially.

For the next commitment period after 2012 either rationing or taxation will be required. Other countries have introduced carbon taxation early, bringing in the correct incentive to encourage the shift from fossil fuels. Sweden has had carbon taxation since 1991, Denmark since 1992.

Ireland is already late. This decision will cost Ireland dearly in the long run.

More: David Healy
01 - 8324087

AN INTERDEPARTMENTAL REVIEW OF THE PILOT TAX RELIEF SCHEME FOR CERTAIN REPORT AREAS
Reprinted with thanks and acknowledgements from Earthwatch Magazine, Spring 2001
Dept. of Tourism, Sport, and Recreation, with the assistance of Department of Finance, Revenue Commissioners, Department of Environmental and Local Government, Bord Failte, and Shannon Development. Unpublished and undated. [Earthwatch Magazine acknowledges the cooperation of the Department of Sport and Tourism in releasing this report on request.]


MAP CAPTION: Originally 8 resorts were named under this proposal - Achill, Ballybunion, Bundoran, Kilkee, Lahinch, Tramore, Westport, and Youghal. Political pressure on Edna Kenny, the then Minister, added Courtown, Co Wexford - and then at the Report stage of the Bill in came Arklow, Clogherhead, Clonakilty, Enniscrone, Laytown/Bettystown/Mosney and Salthill.

PHOTO

Achill

Frank McDonald, The Irish Times Environmental Correspondent, popularised the term toblerone cottages for some of the worst excess of the Scheme in a major series in The Irish Times. Pictured here is the holiday estate on Achill Island. Their design and location repelled many. "Let's be clear about this", says Roger Garland, ex Green Party TD, "this was tax avoidance on a grand scale". [Photo Ian Lumley]

PHOTO

COURTOWN:

McDonald's articles described the holiday-maker's nightmare of swimming in their own unmacerated sewage at the local strand. This transpired to be the result of a hiccup in the ad hoc sewage arrangements, the connection to the Gorey sewage scheme not yet having arrived. "In an ideal world", the Wexford County Manager told The Irish Times, "we would have liked to put all of this in place before anything happened, but the resources simply weren't available at the time because nobody anticipated the level of development." [Photo Ian Lumley]


BOX TEXT

How We Got Around the EU again!

After the experience of the Resort Scheme, the EU challenged the Rural Renewal Scheme's ten year tax benefits as "operating aids" which might have an effect on trade between member states. Ireland pled and - with an agreement to tighten the strings from 2002 and to produce "detailed annual reports on the implementation of the Scheme" - was successfully with the poor mouth once again, calling towns like Mulingar and Longford "areas where the standard of living is abnormally low or where there is serious underemployment."


BODY TEXT:


The controversial "Pilot Tax relief Scheme for Certain Resort Areas" was suggested by the Chairman of Bord Failte in 1994. It was strongly supported by the Mayo Minister for Tourism Edna Kenney. It was introduced in 1995 and ended in 1999. This report relates that the State's role in tourism was defined at that time as to "optimise foreign exchange earnings and employment, through developing an environmentally-sensitive tourism" while capitalizing on its "green unspoilt image."


From the first, it was a disaster for the environment and the economy - and a boon to the local property owning class and the urban rich seeking to avoid taxes. The scheme was designed to be particularly broad because an "attractive package" was supposed to be required because of "the dereliction of many of the resorts." Some - Clonakilty and Westport, for example - were anything but derelict and were thriving as it was. It suited the powers that be, however, to take some of the pressure off the overheated Dublin property investment market.


The bounty meant that not only could double rent allowances and capital allowance be taken in these areas but with few exceptions the capital allowances could be set off against ALL income - and not just rental income. A ring fencing provision was introduced after the first year but the report confirms that a number of non-ring fenced properties were still available when this report was complied four years later, not surprising given the flood of investors, mainly from high-earning PAYE workers and double-income families.


The local authorities, faced with what appeared to be "national policy", largely rolled over to what Leo Hallisey, the director of Forum in Letterfrack, called the "new symbol of colonialism". This report would have benefited from an assessment of planning applications granted or refused under the Scheme, at either local level or through the planning appeals board, which in fact turned down some of the worst excesses of the Scheme.


Then Planning Board Chairman Paddy Duffy, under attack at an Oireachtas Committee, said the Board had upheld appeals against "insensitive schemes in coastal areas which did not pay sufficient regard to county development plans". Notable refusals included 18 homes for RTE's Marian Finucane's husband on the Corraun peninsula in Mayo, a massive scheme on Ventry Strand on the Dingle Peninsula (where it cited "the cultural heritage of this Gaeltacht area" as one of the principal reasons), and certain schemes in Enniscrone and Lahinch. Last year's Annual Report showed that An Bord Pleanala only approved without change 3% of the local authority decisions challenged by a third party.


What did the scheme give us - and what was its cost?


As predicted by environmentalists - especially Friends of the Irish Environment's Dr. Sara Dillon - the scheme repeated the failure of the Urban Tax Incentive Scheme to actually bring about restoration or rebuilding, which only accounted for at best 10% of either Scheme's investments. The report catalogues a woeful list of what happened instead:


¬? Toothless smile effect in streetscapes where old buildings were left to fall while modern one were added

¬? the ring donut situation with intensive development on the edges of towns and villages

¬? proliferation of suburban style estates

¬? large tracks of housing intruding on the landscape

¬? primary selling points of Irish tourism undermined

¬? developments of a scale and nature at variance with the resort

¬? lose/alteration of character

¬? off season ghost town effects

¬? inflationary land prices in excess of national trends

¬? infrastructural overload

¬? failure to attract overseas visitors

¬? no lasting employment

¬? units not genuinely "on the market" as required by the scheme


All of this came in 5,300 self catering units, 55 hotels, 103 bed and breakfasts, 41 licensed premises, 99 retail outfits, and a scattering of cafes, tourist information facilities, sports faculties, and the like.


The highest number of self catering accommodations went to the smallest town. Courtown, with a population of 364, gained 890 units. Enniscrone, with 692 residents, gained 379 units. In fact, 80% of the Scheme went into self catering accommodation, some of it in world famous fragile landscapes, such as Achill Island and Sound.


In Bettystown, Co Meath, the scheme might have been used to give the resort some coherence. Instead, apparently random clusters of holiday homes have added to the visual chaos while the roads are rutted and electricity supplies run in on timber poles. As bad as the effects are, it is to the credit of local groups and environmentalists that the damage was not far worse, especially in the West.


While this Report hotly defends the infrastructural backup, in some cases this was robbing Peter to sandbag Paul. In Clonakilty, for example, "£660,000 was provided to pump the sewage from Inchydoney to Clonakilty". What the Report does not relate is that the Clonakilty sewage plant itself is already overloaded and the Bay, an EU Special Area of Protection for birds, has been transformed in the summer heat to a malodorous mud flat where swimming is no longer safe. Good drinking water, already at a premium in rural Ireland, was almost invariably compromised by the ballooning new demands.


The Report also fails to address the issue raised in the - Media of the rise in public order offences that have been experienced in some of the "Gaelic funk holes". According to one - Media report, in 1998 Garda prosecutions in Lahinch were instituted against 70 people arising from public order incidents in the town compared to 29 the year before. The Connaugh Tribune reported that a notorious gang from Fingal in North Dublin availed of the Courtown holiday faculties, celebrating their August 1999 Bank Holiday by smashing, stealing, and burning cars in the Harbour area, beating a partially blind 87 year old bachelor senseless in his own home, removing the genitals from a dog, and shooting dead two of the swans on the river "as local children screamed in terror".


Whatever about the environmental and social costs, it now appears the financial cost will never be known.


The Report notes as a salutary lesson that when the schemes were designed "no mechanism was put in place that would allow for the tracking of developments, the investment involved, and the tax forgone."


The authors thus rely primarily on local authority replies to their enquiries, and only 46% of the local authorities replied. The other primary source was the regional tourist authorities. In many cases "quite extensive areas, stretching well outside the actual towns/villages, were designated". Local authorities were sweetened by a £3.3m package of infrastructural investment. By comparison, tourism grants 1994 - 1999 came to £427m.


The serious money was made by the local property owners who could build with tax breaks, hold on for 10 years, and then sell off and pay little in capital gains. Though the report is coy with figures, trade sources quoted in the - Media suggest that rents average £400 to £500 per week for a three-bedroom unit in peak season. At around £150 per head, this is more attractive to holidaymakers than paying £50 a night for hotel accommodation. The average gross income for a seaside rental property would thus be in the order of £5,500 to £7,500, according to one selling agent.

The report acknowledges that the scheme raised land prices out of line with national trends. What it fails to point out is that local residents are still now paying the price for these inflated prices in trying to build their own homes, as the end of the tax breaks has not in practice meant that the land prices dropped back to the national average.


The value of the investments under the Seaside Resort Scheme rocketed past the Government's expectations. As late as March of 1999, McCreevey told the Dail in a reply to a written Parliamentary Question that the total investment would be £250. This report gives a figure of £600 - 700m.


At first sight this seems insignificant compared with the Urban Renewal Scheme, which ran for ten years and clocked up £2.3 billion. But in fact the tax forgone over the ten years of the Urban Renewal Scheme was estimated to be only between £370 and £461m while the tax breaks in just four years of the Sea-side scheme for capital allowances alone - without rent - are estimated at £250 to 300m - very nearly double the annual rate for the Urban Scheme.


The report refuses to give an estimate of the tax forgone in double or single rent allowances, but it must be counted in the millions, probably bringing the annual value to those seeking to avoid tax to over twice the annual cost of the vastly more important and effective urban renewal Scheme. The Urban Renewal Scheme, for all its faults, helped rebuild the almost derelict centres of towns like Kilkenny, Galway and Cork, encouraging high density multi use and taking the pressure off the surrounding hinterlands. In Galway, that scheme was used for innovative initiatives reintroducing buildings that permitted living above the shops once again. And don't forget Dublin's Temple Bar.


This study calls the existence of schemes like the Resort Areas in the present climate "highly questionable", noting that the "private investor will certainly avail of, but do not need, tax incentives to undertake much of the investment which has occurred".


This conclusion itself can only lead to further questions about the new Rural Tax Relief Scheme in the Roscommon, Sligo, Leitrim area announced last year. Are the "Integrated Area Plans" that are supposed to being developed to govern this investment going to be any more effective in directing investment to appropriate areas and types of development than the County Development Plans were last time round? The heavy advertising for car based commuter tax break new build homes for hard pressed Dubliners being offered in towns like Longford and Mullingar doesn't make it seem likely.


Tony Lowes



DEVELOPMENT STRATEGY: VENTRY AREA

What we lack is an assessment of the effect of policies and development consents given to date in the study area.

July 1999

DEVELOPMENT STRATEGY: VENTRY AREA

What we lack is an assessment of the effect of policies and development consents given to date in the study area.

We know the area's assets. This organization and others during the holiday homes incidents urged the planning authority to establish policies to preserve as far as possible not only the physical nature of the environment but also the balance of the community upon which the language and traditions depend.

Those seeking such policies are directed to the County Development Plan. If we did not know the area itself, a reading of the 1996 Development Plan and an examination of its maps would convince us that there is no further need to entertain any concerns about the protection of the Ventry area's assets. We could rest assured as well that the local authority was doing all in its power to encourage appropriate low impact developments that will ensure secure employment in sustainable industries and safeguard the security of the long term residents.

In fact, this is all aspirational. Protection has only been won for a place like Ventry Strand at enormous effort by conservationists that perforce allowed elsewhere at least as many single developments to erode the area's landscape.

Your advertisement asks for a strategy that addresses the "capacity, location, nature, scale, and type" of future development. Where is the analysis of the 1989 County Development Plan? What actual developments have been permitted in High Amenity Areas and Conservation Areas and what have been their impact? To what degree have the improvement in roads contributed to the loss of character of the area without contributing to road safety? To what degree have agricultural practices such as hedgerow removal and drainage contributed to the loss? What would be the constituents of an inter-disciplinary approach required to effectively address the problems you have presented in your advertisement in the traditional terminology of the local authority planning officers?

How can we suggest a strategy for a better future if we have not analysed the mistakes of our recent past?




The extension of the tax incentives to the BORDER, MIDLANDS AND THE WEST


Rural Renewal Scheme for the Upper Shannon

15 July 1999.

Mr. Liam Murphy,
Principal Officer,
Budget and Economic Division,
Department of Finance,
Government Buildings,
Upper Merrion Street,
Dublin 2.


Dear Mr. Murphy,

Last January, the Heritage Council expressed a number of concerns about the pilot Rural Renewal Scheme for the Upper Shannon, in relation to its potential impact on the national heritage, to the Minister for Finance. Following this submission, the Council is pleased to note that a number of amendments were made to the scheme. In particular, amendments were made to the provisions relating to the size of eligible developments, the application of the incentives to derelict and unoccupied housing, and their application to owner-occupied residential developments.

The concerns and recommendations of the Council relating to the lack of an overall strategic plan for the pilot area were not addressed at this time, and Council wishes to address this issue once again with both the Department of Finance and the Department of the Environment & Local Government.

The area encompassed by the pilot scheme is one that is particularly susceptible to irreversible damage of its heritage and environmental resources due to insensitive and inappropriate development. It is essential, therefore, that all development within the area, and particularly, that which takes place as part of the incentive scheme, adheres to the principles of sustainable development. Given the abundant water resource that exists in the area, there is enormous potential for the sustainable use of amenities, but this is an objective that has to be planned for in a structured way, rather than hoping that market forces will identify and realise development which is sustainable.

The two major concerns of the Heritage Council in relation to the operation of the pilot Rural Renewal Scheme for the Upper Shannon, are as follows, and are expanded upon below:



- 2 -


- The lack of a strategic spatial plan for the area designated for the purposes of the pilot scheme to determine what development is most appropriate where and at what pace.
- The failure to appoint a government department or agency with responsibility for the monitoring and evaluation of the scheme with respect to its sustainability.


1. The lack of a single strategic plan for the area designated for the purposes of the pilot scheme
The five counties involved in the pilot scheme are Longford (entire), Leitrim (entire), Cavan (part), Roscommon (part) and Sligo (part). These counties straddle the boundaries of three Regional Authorities: Border (Leitrim, Cavan & Sligo), Midland (West), and West (Roscommon). One of the functions of the Regional Authorities is to co-ordinate the Development Plans of its constituent authorities. In this case, with three regional authorities involved, there is unlikely to be a great deal of co-ordination between the current Development Plans of the five counties. In effect, a new region has been identified, and one which requires a strategic plan to guide and co-ordinate its future spatial development. The combined Development Plans of the five local authorities in question is not a sufficient strategic planning tool with which to ensure that the development, which will take place within this 'region' as a result of the pilot scheme, will be in line with the principles of sustainable development.

Following the KPMG report on the first ten years of the Urban Renewal Scheme (1996) and the results of the Seaside Resort Scheme of the past several years, we can no longer afford to embark upon a scheme which offers lucrative financial incentives for property developers, without first putting in place a strategic plan which simply identifies what type of development is most appropriate where, and indicates an acceptable limit to the various types of development. One of the main recommendations of the KPMG report in 1996 in relation to the Urban Renewal Scheme, was that in any future scheme, local authorities should be required to prepare Integrated Area Plans for their designated areas. The same principle should apply to the pilot Rural Renewal Scheme. It is no longer acceptable to adopt a laissez faire approach to socio-economic regeneration, allowing the market to dictate what kind of development takes place where and at what pace.

The Council notes from the Minister for Finance's response to a Parliamentary Question on 1 July 1999, that "the aim of this pilot scheme is to improve the economic and social condition of this deprives rural area……". The approach being taken to address this condition, however, is solely concerned with the enhancement of economic growth. This form of issue-specific planning response fails to grasp the essential characteristic of good planning: the establishment of a comprehensive and balanced solution applied to all sectors of activity and interest on a continuous basis over time. The government's strategy for sustainable development states that "spatial planning and land use policies, which of necessity have long time frames, seek to promote orderly development to support socio-economic policies concerned with, for example, balanced regional development, social integration, urban renewal and the maintenance of strong rural communities", yet strategic planning has been given no place in this scheme. The Heritage Council is calling for the promotion of a strategic vision and a commitment to the principles of sustainable development in the implementation of the pilot scheme.

The Heritage Council recommends that such a strategic framework should be prepared by a group constituted of the following bodies:

- the five local authorities
- Department of the Environment and Local Government
- Department of Finance.


2. The failure to appoint a government department with the monitoring and evaluation of the scheme in respect of its sustainability
The Department of Finance has alone been appointed to oversee the implementation and review of the pilot scheme. This again reflects the single-issue approach of the government to this scheme, and the Heritage Council is not aware of any evidence to suggest that the indicators to be used in measuring the performance of the scheme will be any other than economically-based. This is clearly not in line with the principles of sustainable development, nor is it in line with the thrust of the government's strategy for sustainable development in Ireland, as outlined in the document Sustainable Development - A Strategy for Ireland. An integrated approach should be adopted to the monitoring and evaluation of the scheme, co-ordinated by the Department of the Environment and Local Government, as the government department responsible for spatial planning.

In light of these concerns, the Heritage Council requests a meeting with representatives of both the Department of the Environment and Local Government, and the Department of Finance, to discuss these issues further.



Yours sincerely,



Paddy Mathews
Planning Officer.



Objection to Grant of Planning Permission

Development: 21 Holiday Homes

Location: Ventry. County Kerry

Planning Ref No. 3198/98

Date of Application: 31/12/98


Dear Secretary;

Friends of the Irish Environmental object to any grant of permission for any development at this location.

We do not believe that the reduction in scale and layout answer the grounds of refusal by An Bord Pleanala which also referred in equal measure to the nature of the development and the proximity to the beach. [PL 008.103176, 21 May, 1998]

Further, the Board's decision referred not alone to the dune habitat but equally to the views of special amenity value, both of which would suffer adverse impacts through any grant of permission at this location.

Confining holiday homes to the existing settlement patterns serves the dual purpose of ecological protection and community reinforcement, central tenets of sustainable development as expressed in national policy documents.

This development would place an large suburban style village in the midst of agricultural land which has been developing according to small scale interventions for generations. The local authority should affirm the county tourism policy which seeks to strengthen existing settlement patterns of tourist centres and locally owned tourism amenities.

This is particularly true at this location on the Dingle Peninsula as it is long established national policy to protect the cultural heritage of Gaeltachta Areas. This protection should seek to preserve as far as possible not only the physical nature of the environment but the balance of the community upon which the language and traditions depend.

It is acknowledged by everyone, and most adamantly by Friends of the Irish Environment, that there must be both planning and economic policy to encourage local people to remain in Gaeltacht (and other) rural areas, which are both fragile and vitally important cultural communities. Turning agricultural land into holiday home developments is a proven method of raising land prices beyond the reach of a local community, destroying any possibility of maintaining cultural cohesion.

The pull into larger cities and towns can only be reversed by carefully targeted planning and economic policies which provide start up money and incentives for local people to develop small scale business appropriate to the sustainable development of their area. Local people in areas like Dingle must retain control over their own local tourism industry. Once that slips from their hands, they have essentially lost the ability to remain in their own place.

For all these reasons we support the local objectors to this project and urge your authority to confirm the decision of An Bord Pleanala by refusing outline permission for any development at this location.

Finally, we attach a copy of our letter to the Minister to the Environment relating to repeat applications at locations determined to be inappropriate for development by An Bord Pleanala.