Concrete levy at 5% will be in place 'for foreseeable'

The reduced rate is set to draw in €32m if revenue annually

Minister for Finance Paschal Donohoe said there will be 'no sunset clause' in relation the levy. Picture: PA 

A concrete levy will be in place for the “foreseeable future,” according to the Finance Minister, who confirmed the rate will be cut to 5% and deferred until September next year.

Paschal Donohoe also announced that the levy will not apply to pre-cast concrete products, in an effort to ensure that jobs in this export-led sector are protected.

However, he said the levy will apply to concrete blocks that are purchased in Northern Ireland, after it was flagged that purchasing there could be a way of avoiding the charge. He said: 

Regardless of where the poured concrete or the blocks are sourced, the levy has to be paid in Ireland.

The three changes to the levy, which was originally 10% and due to come into effect in April, come after Fianna Fáil backbench TDs expressed serious concerns about the warnings from the construction industry that the levy would push up the cost of a home.

The levy, which was announced on budget day as a revenue stream to help fund the mica redress scheme, was originally forecast to raise €80m but the changes mean it will now raise €32m annually.

Mr Donohoe said for a three-bedroom house this levy could lead to an increase in building costs of between 0.2% and 0.3%, and up to 0.2% to the cost of an apartment. He added: 

This levy is now at a lower rate, but I believe it's going to be here for longer, so there will be no sunset clause in relation to it.

Mr Donohoe would not say — despite several questions — that it was a u-turn on his budgetary measure. He said, “I am accepting that there is a change versus what I announced the budget day.”

Housing Minister Darragh O’Brien had warned Mr Donohoe that TDs had serious reservations about the 10% levy.

Mr O'Brien told his Cabinet colleague that "these concerns were particularly acute in the context of inflammatory pressures on the building sector and (the) need to boost housing supply."

Mr Donohoe said it was more of the engagement that he had within government including with Minister O'Brien that made a difference on this issue.

Taoiseach Micheál Martin defended the levy in the Dáil, as Independent TD Thomas Pringle claimed it would “shift the blame” for the housing crisis from the Government and “light-touch regulation” on to homeowners.

Mr Pringle called for a levy to pay for structural defects to be imposed on the profits of banks and construction companies.

He confirmed the Finance Bill will be published on Thursday and debated in the Dáil next week.

The Construction Industry Federation hit out at the levy in a statement released this evening, saying it should be "resisted" until an assessment had been completed, and that it was a "blunt instrument" that would see the first-time buyer, public, and private client bearing the brunt of the defect issue. 

"This is a quality control issue for suppliers of raw materials and manufacturers into the construction industry," it said.