THE GOVERNMENT plans to cut the interest charged on late tax payments to the Revenue Commissioners in a bid to ease pressure on business.
Under the terms of a measure included in this year’s Finance Bill, which was published yesterday, the Government is proposing to cut interest charged on late and underpaid tax by 20 per cent.
If it is passed, the move will reduce the interest charged on most taxes to 8 per cent a year. The Bill proposes introducing the new rates from July 1st and the measure applies to businesses and taxpayers engaged in business activities.
The Department of Finance said the move is designed to alleviate “pressure on businesses at a time of considerable economic difficulties”.
The measure is one of a number included in the legislation that were not announced in either the October or April budgets.
Another proposal allows for the extension of the deadline for applying for tax breaks under a scheme designed to boost tourist facilities in the midlands.
The mid-Shannon tourism infrastructure scheme was introduced last year after the EU cleared the proposal.
The deadline for applications for projects to qualify for the scheme is May 31st. The Bill proposes extending this date to May 31st next year, and extending the period within which money must be spent to qualify for the allowances to May 31st, 2013.
The legislation confirms key Budget measures such as the increase in the income levy rates to 2 per cent from 1 per cent for those earning up to €74,036 a year.
Workers earning between €74,036 and €174,980 will pay 4 per cent on their wages. Those earning over €174,980 will pay 6 per cent.
Only those earning less than €15,028 a year will not have to pay the income levy.
The Bill will also limit mortgage interest relief to the first seven years of a qualifying home loan.
The Finance Bill signals the end of a number of property-based tax reliefs, including those for building private hospitals, nursing homes and health centres.
In a statement issued yesterday, the department argued that the Government’s approach means that the value of its spending cuts will exceed the amount raised through increased and new taxes.
“The reality is that the expenditure reductions adopted since last July will amount to at least €4.3 billion in 2009,” the statement said.
“The taxation increases in October’s budget and the supplementary budget were introduced to raise approximately €3.8 billion.”
