Ahern defends developers’ tax breaks

FORMER taoiseach Bertie Ahern has staunchly defended a special tax break which aimed to encourage the buying and selling of development land and which, it has emerged, cost the exchequer €800 million over a seven-year period during the Celtic Tiger era.

The Special Incentive Tax Rate – which was abolished last year along with a range of other tax breaks for rural and urban development that cost the exchequer €2 billion during the boom times.

Mr Ahern, who was taoiseach when development incentives were introduced, said yesterday that when the incentives were brought in “the place was in a disastrous place”.

He went on: “I’m very proud to look at the Quays today in Dublin. There were reports for 40 years saying the quays needed something done about them but nothing happened until we brought in the urban renewal status and gave the tax incentives to that.”

But the figures show that “life became one big tax-break bonanza for property speculators under Fianna Fáil,” according to Labour’s finance spokeswoman, Joan Burton.

According to the Revenue Commissioner, the tax break was used more than 10,000 times between 2000 and 2007, and allowed those selling land for development to pay 20% when many were paying 42% income tax.

“Basically it incentivised anyone who had two or three fields, or hundreds of acres, outside any town or city in Ireland, to get involved in the property development business and to ramp up the price of land,” said Ms Burton.

“This was one of the key things that fuelled the property bubble. It drove up the price of land and many of the people who bought houses at high prices are sitting on very large mortgages which they are finding difficult to pay,” she said.

The figures also show how the tax became exploited by developers who used it 385 times in 2001 compared with 2,467 times during the height of the boom in 2006.

Ms Burton said: “This was just part of a carnival of speculation that was ramped up and egged on by, in particular, Mr Ahern’s first and second administration.”

She said: “From the late ’90s onwards, when Charlie McCreevy was finance minister, he created a series of exemptions and loopholes that allowed people in property, development and construction to basically avoid or reduce their tax even though they had multi million euro incomes.”