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Road tolls hit by VAT as new bill scraps tax relief

Public car parks and road tolls will be hit with VAT charges for the first time in one of a range of tax reforms announced today by Finance Minister Brian Lenihan.

And the Government aims to attract Middle Eastern business operating under strict Islamic law.

The Finance Bill also scraps several tax reliefs and massively increases fines for smuggling.

Opposition parties said the new VAT charges would hit hard-pressed homeowners and do nothing to create jobs.

But Mr Lenihan said the new laws would boost economic recovery and the work of the Revenue Commissioners.

Highlights of the Finance Bill 2010 include:

  • Public bodies, including local authorities, will charge VAT on street parking, tolls and leisure facilities from July 1

  • Islamic investors and businesses will be assured their Irish operations meet strict Shari'a law

  • A Life Insurance Levy, introduced last year, will be scrapped from pension products to encourage a better take-up

  • Tougher penalties for those convicted under excise and customs law to help discourage smuggling

  • New laws on transfer pricing -- the trading of goods and services between subsidiaries in the same group of companies

  • More measures to promote Ireland's financial services industry

  • Several tax reliefs are being scrapped, including those on service charges, gifts of property to the state, relief for those on long-term care policies.

The Labour Party said homeowners were being hit in the pocket by the new laws.

Joan Burton, Finance spokeswoman, said: "The Finance Bill will mean extra hardship for many families and households as the Minister proposes to charge VAT on a range of local authority services."

"There is a double whammy in relation to service charges, such as waste collection, for which income tax relief will be abolished from next year."

Her Fine Gael counterpart Richard Bruton echoed the sentiments.

"It's depressing to witness the lack of ambition and vision displayed in the Government's Finance Bill," Mr Bruton said.

"The Bill is little more than a tidying-up exercise that makes life easier for the Revenue Commissioners and tax advisers, while also hitting ordinary households with hundreds of euros of extra tax charges."