Concrete tax halved after concerns over impact on home construction

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Finance Minister Paschal Donohoe has confirmed he will halve the concrete tax from 10% to 5% after “many” Cabinet colleagues raised concerns about it.

The change comes after government TDs and construction industry representatives raised concerns that it would increase the cost of construction amid a housing crisis.

The introduction of the tax will be postponed from April to September 1 and it is expected to bring in 32 million euros over 12 months, less than half of the 80 million euros initially planned.

A levy on 18 concrete products and the pouring of concrete was announced as part of Budget 2023 to fund a remedy scheme for people living in homes built with faulty building materials.

The levy has been limited to concrete blocks and concrete pouring only, and will no longer apply to precast concrete materials.

“I accept the questions that have been raised about the potential for this tax to undermine very valuable exports in particular, on which a number of Irish businesses and a number of Irish jobs may depend,” Mr Donohoe said. .

“I listened [Minister for Housing Darragh O’Brien] but I also listened to other Cabinet colleagues, many of whom raised issues with me about this, and all were listened to, including Darragh.

Asked about the government’s ability to make tough decisions, Donohoe said the levy continues.

“I think the credibility of the government as a whole with respect to this budget, and with respect to our ability to make tough decisions, is absolutely intact.

“If you look at the magnitude of the change we’re making here, it’s a change in terms of the rate, the loss of revenue, which is 30 million euros out of 87 billion euros in tax revenue for the year next.”

Faulty building blocks containing excessive deposits of mica and pyrite have caused thousands of properties across the country to crack and collapse.

The government’s defective concrete block scheme, estimated to cost €2.75 billion, offers grants of up to €420,000 per dwelling to repair or rebuild them.

Homes in counties Clare, Donegal, Limerick and Mayo are covered by the scheme.

Mr. Donohoe said there would be no sunset clause for the levy, as he believed it would be in place longer than originally planned to fund the recourse program.

“I think it is important that this measure does not have a sunset clause so that we can keep it in place for as long as necessary to recover a good part of the additional money needed to help rebuild homes due to of mica.”

After the 2023 budget, opposition politicians criticized the concrete tax structure, saying it threatened to raise the cost of building homes amid supply shortages.

The Institute for Economic and Social Research think tank said of the initial concrete tax: “Given the strong demand for housing combined with long-standing supply constraints, the burden of this new tax is likely to fall on residents of newly built homes rather than industry.”

The Society of Chartered Surveyors Ireland estimated that the 10% tax would add around €3,000-4,000 to the cost of building a three-bedroom semi-detached house.

Mr Donohoe said the revised tax could increase the cost of building a three-bedroom house by between 0.2% and 0.35%, and between 0.15% and 0.2% for an apartment.

He added that he was confident in the numbers and would release the analysis behind them in the coming days.

Ireland

First-time buyers cannot be exempted from concrete…

The finance bill, which is the legislative basis for the concrete levy and other budgetary measures, will be published on Thursday.

Mr Donohoe also announced that the €500 rent tax credit would be extended to parents of third-tier students if they pay their rent and the rental is registered with the Residential Tenancies Board.

Asked what additional costs this would entail, Mr Donohoe said it would be “broadly consistent with the numbers we have in our budget”.

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