In a written Parliamentary Question last month, Deputy Joan Burton asked the Minister for Finance for details of tax foregone under property tax-based schemes in 2006 and 2007 and under the business expansion scheme and the seed capital scheme in 2006 and 2007.

The Minister provided the figures for 2006 property tax-based schemes which showed Urban Renewal to have given rise to the largest “tax forgone” figure of €140million in 2006. Tax-based schemes for guest houses and hostels yielded the lowest tax forgone figures of €0.82million and €1.4million respectively.

The tax forgone figures for the Business Expansion Scheme and Seed Capital Scheme were as follows:

The seed capital scheme in theory is an excellent means of encouraging entrepreneurship as it offers an individual starting up a new enterprise the opportunity to fund the investment in the new company by way of a refund of tax paid over a number of years before commencing the business. The low uptake in the use of seed capital relief is perhaps reflective of the fact that the conditions and terms of the relief are very difficult to manoeuvre with over 20 sections of legislative conditions attaching to seed capital relief and BES relief. The increased maximum relief from €31,750 to €100,000 per annum as introduced for the 2008 tax year onwards may go some way towards encouraging greater use of seed capital relief. However with a cut off deadline of 2013 and no attempt to reduce the multitude of conditions, it appears that seed capital is consigned to remain an excellent relief in theory only.

As long as officials continue to cost these schemes in terms of “tax forgone”, things are unlikely to change.