The Government’s help-to-buy scheme will be modified so that “couples who can already well afford to buy” will not be unfairly subsidised, Taoiseach Leo Varadkar has said.
It is expected that an altered version of the incentive will form part of Tuesday’s budget following talks between Fine Gael, Fianna Fáil and the Independent Alliance.
All parties have agreed that the scheme, which offers tax rebates of up to €20,000 to first-time buyers purchasing a new build worth up to €500,000, should continue. It had been due to end in December.
The Government has been examining lowering the cap from €500,000 to somewhere between €250,000 to €300,000. A senior source said there are still “mixed views” on the proposals but it is hoped that lowering the cap will incentivise developers to build more affordable homes in this price range.
Mr Varadkar has signalled changes to the scheme, saying some couples who could already afford a deposit were benefitting.
“What we’re working on are some modifications to make sure that it is actually helping young couples to buy, rather than subsidising couples who can already well afford to buy.”
Some €206.4 million had been claimed by such first-time buyers by August of this year. Talks have centred on the proposed new cap as well as the funding of the scheme as it must be paid from the Government’s limited €700 million spending pot.
Last-minute meetings between the Taoiseach, Ministers and the Independent Alliance continued on Sunday with the focus on carbon tax and health.
In health, it is anticipated there will be extra funding for the National Treatment Purchase Fund as well more money for home-help hours. Free GP care for under-eights is expected to be introduced at the start of the school year while prescription charges for over 70s are to be reduced. In social protection, there are expected to be no blanket welfare increases, as in previous budgets.
The extra financial allocation to the Department of Social Protection is likely to be half of the €360 million secured last year, say sources.
Minimum wage
The living-alone payment and qualified-child payment are likely to be increased as part of a series of targeted measures.
On tax, there are expected to be no across-the-board cuts. Instead, small tweaks to the universal social charge are expected in order to protect against the expected rise in the minimum wage.
However, it has emerged that any increase in the minimum wage could be deferred for a couple of months until March of next year in the event of a no-deal Brexit.
While there is no financial room for across-the-board tax cuts, the Government is seeking to “correct anomalies” in the system.
The personal tax credit for a self-employed person is €300 lower than the tax credit for PAYE workers.
Meanwhile, the carbon tax is likely to be increased to between €6 and €7 a tonne. Talks were under way between the Independent Alliance and Mr Donohoe on Sunday night with members of the alliance keen to ensure there are financial supports available to poorer households who cannot afford an increase in the carbon tax.
Speaking at a Fine Gael presidential dinner over the weekend, Mr Varadkar said there would also be provisions in the budget for increased demand for health, education and disability services.
“It will also be a climate budget. We will use the budget to step-up climate action. We must do that in every budget from now on.”
