THE GOVERNMENT has delayed plans to phase out a batch of controversial property tax reliefs following intense lobbying from a range of property and taxation interests.
The section 23 property reliefs were due to have been curtailed in the Finance Bill, published yesterday, but will now remain in place until an assessment of their economic impact is completed.
This is expected to take several months, with the result that the exchequer will not benefit this year from the €60 million the Government had expected to save by restricting the tax breaks. It will attempt to compensate for this by tweaking business taxes.
The Government had been lobbied by bodies including the Irish Property Owners’ Association, the Society of Chartered Surveyors, the Construction Industry Federation and the Irish Taxation Institute on the issue.
Labour claimed business groups had been able to “bend the ear” of the Government to postpone the phasing out of section 23 tax reliefs.
Defending the decision, however, Minister for Finance Brian Lenihan said the Government had decided on this approach in light of the “wide range of concerns that have been expressed by individuals and groups, in particular regarding the effects of the changes on the real economy and on employment”.
Section 23 allowed buy-to-let investors to reduce their overall tax bill by offsetting any Irish rental income against a portion of the cost of a designated property for 10 years.
Under proposals contained in December’s Budget, this relief was to be restricted to income coming from the section 23 property itself. Many property investors argued that the change would leave them facing a choice between paying their tax bill and entering bankruptcy.
The Bill gives effect to measures contained in the Budget, including the universal social charge and cuts in tax bands. The successful enactment of the Bill is viewed as important under the terms of the EU-IMF bailout. Among measures introduced for the first time is a shift in the “pay- and-file” date for income tax from October 31st to September 30th, a move likely to affect more than 600,000 taxpayers.
The Bill awards greater powers to the Revenue Commissioners, who will now be able to pursue people making false claims for tax relief or tax credits, as well as finding it easier to publish the names of tax defaulters. Revenue will also start to accept tax payments by credit card.
Other measures in the Bill include an increase in the private insurance health levy, the curtailment of tax reliefs for student fees and the extension of duty to online betting and betting exchanges.
Provisions relating to the tax treatment of civil partnerships and bank bonuses are expected to be inserted as the Bill progresses through the enactment process.
Fine Gael says it will facilitate the speedy passage of the Bill through the Oireachtas but it would also table amendments to provisions it found “objectionable”.
