The Government should not consider any return of previous Celtic Tiger-era tax breaks for developers that did “such harm” to the economy and housing market, Minister for Finance Paschal Donohoe has said.
Fianna Fáil and Fine Gael are split over how to boost the supply of new housing, with Fianna Fáil more eager to introduce some form of tax incentive scheme to encourage developers to build.
Speaking in Brussels on Monday, Mr Donohoe said he would not support the reintroduction of similar tax schemes to those last seen during the property boom.
“What I am not going to do is reintroduce or propose the very tax reliefs that did such harm to our economy and then the building of homes for many years in Ireland,” he said.
Previous tax breaks, such as section-23 relief, had proved to be “very, very costly”, he said.
“We have already acknowledged that it can be very difficult to identify how they can be targeted, and I don’t believe those policies are the ways in which we will make progress in the delivery of more homes,” Mr Donohoe said.
Section 23 tax breaks enabled investors to offset taxable rental income by buying a new property for rental purposes, which critics say led to homes being built in unsuitable areas and ramped up excessive lending. The scheme was abolished in the years after the financial crash.
Fianna Fáil is believed to be pushing for incentives to boost private-sector investment, with proposals that would be more restrictive and better targeted than the section 23 scheme.
Mr Donohoe said there were plenty of other ways the Government could increase the number of homes being built.
“It’s clear that we need to do more with regard to infrastructure. It’s clear we have to be better able to meet the energy and water needs of those who are building homes ... We can reconsider where we are with our planning frameworks,” he said.
The comments came in advance of a Cabinet committee meeting on housing on Monday, where disagreements in the Coalition over housing policy may come to a head.
Mr Donohoe was speaking in Brussels, where he was attending a Eurogroup meeting of EU finance ministers.
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Turning to fears about United States president Donald Trump levying taxes on imports coming from Europe and elsewhere, Mr Donohoe said Ireland was more exposed as an open, trading economy.
The European Union needed to see if there was a “pathway” to a negotiated alternative, where a deal was struck with the White House that averted tariffs, he said.
Mr Trump has ordered officials to draw up reports on US trade with other countries, which many fear will set the stage for much more sweeping tariffs, than those he announced he would put on imports of steel and aluminium into the US.
The EU would be prepared to hit back in a “firm and proportionate way”, if Mr Trump did slap steep tariffs on goods coming from the EU, Mr Donohoe said.
