The Government’s VAT reduction to encourage the development of apartments has been “torn apart” by its own Parliamentary Budget Office for a “lack of evidence”, according to the Social Democrats housing spokesman. The claim was made during heated Dáil exchanges.
Rory Hearne alleged “billions” will be given to developers and investors for apartments that are already under construction.
Tánaiste Simon Harris rejected the billions accusation and said Mr Hearne is ”captured by an ideology that believes private investment in the housing market is bad”.
Mr Harris said: “You can’t just say a million here and a million there comes to a billion.”
RM Block
When Mr Hearne said it will be half a billion euro, the Tánaiste told him “half a billion is not the same as a billion”. However, the Social Democrats Dublin North-West TD claimed “in four years’ time, €2 billion will have been spent”.
He referred to the Parliamentary Budget Office, an independent, specialist unit within the Oireachtas that provides economic and budgetary information and analysis.
Mr Hearne said the office cited a ”lack of evidence” behind the measure that cuts VAT by 4.5 per cent to 9 per cent for apartments, but includes those already under construction.
“The fact that developers that have already started building thousands of apartments will get this windfall. this is utterly damning,” he said.
”Billions are going to be given to developers and investors for apartments already being built with no affordability obligations. Billions are going to be given to build apartments that no one will be able to afford to buy or rent.”
But Mr Harris insisted “the total package is millions. I presume the proportion that will go to completed apartments is a very small fraction of that”.
“We are taking every step we possibly can to endeavour to increase housing supply.”
Earlier, during Leaders’ Questions, Sinn Féin finance spokesman Pearse Doherty criticised the Government.
In November last year, the Tánaiste promised to “phase out” student fees, but is now asking parents and students to pay €500 more every year. “You have double-crossed them. Another broken promise,” he claimed.
But the Tánaiste said Sinn Féin would have introduced 23 new measures costing billions of euro. It would have been inflationary and “you would actually have added to the cost of living”. Sinn Féin would “blow the economy”, he said.
Independent Séamus Healy appealed to the Tánaiste to reverse the hospitality VAT cut and said the State is “subsidising a very small number of very large, very profitable businesses”.
“McDonald’s – profits up 17 per cent to €42.4 million, a gain of €20 million," he said. “Supermac’s – profits up 28 per cent to €43.6 million, a gain of €12.5 million. Domino’s – €280 million Irish turnover, a gain of €12.5 million. Krispy Kreme – a gain of €635,000.
“Six large companies share €54 million of a windfall gift from the Government, in a country where we have 640,000 people living below the poverty line, including 190,000 children.”
The Tánaiste, however, said: “Not too many of us in here, including myself, have had to lie awake at night wondering how we are going to pay the wage bill.
“Not many of us have to wonder that if we get sick and cannot work where our income is going to come from. Not too many of us have had to worry about the insurance cost of running a small business.”
He said the Government is doing “what we promised the people we were going to do to in the general election”.
