Leo Varadkar: New tax on land hoarders could be increased
Tanaiste Leo Varadkar said the 4.7 billion euro Budget package will deliver real benefits to people (Niall Carson/PA)
The Government could increase a new tax on zoned land, Leo Varadkar has said amid questions about the measure’s effectiveness.
The Tánaiste said the €4.7 billion Budget package announced on Tuesday will deliver real benefits to people across the country, and he rejected opposition criticism that the proposals do not go far enough to address the rising cost of living.
“I think if you take it all in the round it will make a difference in terms of meeting the rising cost of living, which is a real struggle for so many families,” Mr Varadkar said.
One of the surprise Budget measures announced by Finance Minister Paschal Donohoe was a 3% zoned land tax set to apply to land which is zoned as suitable for housing but remains undeveloped.
“The tax will be based on the market value of the land and I have determined that the rate at the outset should be 3%,” Mr Donohoe said.
The tax has a two-year lead-in time for land zoned before January 2022 and a three-year lead-in time for land zoned after that point.
Opposition politicians have questioned why the rate is lower than the vacant site levy it will replace, which is currently 7%.
Sinn Féin’s Pearse Doherty criticised it as a “sneaky little policy” and labelled it inadequate.
“Do you not get the urgency here?” he asked the Government on Tuesday.
Mr Varadkar told RTÉ radio on Wednesday that the measure is designed to put anyone hoarding land “on notice”, and he pledged it will eat into landowners’ profits if land remains unused.
“The purpose of this tax is not to raise money,” he said. “It’s to send out a very clear message to landowners that if you’re sitting on zoned land, if that land is serviced, if you could build housing on it, well you need to.
“If you don’t, we’re going to seriously impact and eat into the profit margin that you thought you were going to get.
“If needs be, we can increase it.”
He rejected the idea that it is a poor incentive to develop land, when the price of land is rising so fast.
He said the vacant site levy had only applied to a couple of hundred sites and the new measure might end up applying to around “8,000 hectares” across the country.
The Tánaiste also acknowledged that while the Budget did not contain any specific measures to support renters, it will still benefit a wide array of people and families.
“We brought in a rent freeze in real terms,” he said. “Next year, rents can’t increase by more than the rate of inflation.”
He also said it is significant that the Help to Buy scheme – a controversial measure intended to make it easier for first-time buyers to purchase a home – has been extended.
“A particular rent tax credit, proposed by the opposition, would only help those people who are struggling to pay the rent,” Mr Varadkar said.
“We want to do something that would help all workers and that’s why we brought in the indexation and tax bands and tax credits.”
He said some of the measures, including free contraception for women aged 17-25 and extending free GP care to the under-7s, is evidence of the Government’s commitment to universal healthcare.
“This is very much Sláintecare in action,” he said.
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