Irish Finance Minister Defends Private Hospital Tax Break

by Jason Gorringe, Tax-News.com, London

07 March 2003

Irish Finance Minster Charlie McCreevy introduced a new tax break to builders of private hospitals this week. However, the announcement was marred by controversy as opponents suggested its sole purpose was a favour for one of the Finance Minister's constituents.

The new tax break was thought up after a meeting between officials from the Department of Finance and promoters of a private clinic in Kildaire. It supposedly gives generous capital tax allowances to builders of private hospitals with 40 beds or more that provide out-patient and day case medical and surgical services. The new rule lets a developer write off 15% of the capital cost of any building project against tax liabilities in each of the first six years, which reduces to 10% in the seventh year.

Although the tax break has not been attacked in principle, it was the manner in which McCreevy was seen to introduce it which has angered opposition groups. Labour leader Pat Rabbitte was particularly incensed with McCreevy's actions, accusing him of turning the Finance Ministry "into a constituency office for the Minister and his constituents who feel their business would benefit from a tax break."

McCreevy denied that the tax break was as a result of being lobbied by a constituent, and argued that the private sector played an important role in taking pressure off the public health system. The private hospital sector in Ireland currently has to make 20% of its beds available to public patients and offer 10% discounts to the health boards.

Seeking to defend McCreevy, a spokesman for the Finance Minister said the move was in no way underhand, arguing that "it is important to make the point that the provision has a general application. It is not case specific".

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