We are all getting use to the so-called “new politics”. One impact was that pre-Budget negotiations meant even more than usual leaked before the big day. Now the new arrangements have affected the Finance Bill too, with no doubt that the key piece of financial legislation will face change in the committee and parliamentary scrutiny to come. The only question is how much.

There is no doubt the Government had to walk the political tightrope when putting the budget together – and the drama may not be over yet. From the help-to-buy scheme to the new tax arrangements on vulture funds and Irish real-estate funds, you can see the balances being struck, as Minister for Finance Michael Noonan tries to keep the Government afloat, while also addressing some key constituencies.

And, crucially, he also does not want to frighten the horses by alienating key groups of investors at a time when the Brexit process is creating quite enough uncertainty.

The Finance Bill is always a balance, but this year it is particularly tricky and delicate, notably in moves to address concerns about tax-avoidance schemes based on investment in special companies and funds. Here the Government tried to strike the balance by exempting international businesses from the new taxes, while meeting the political need to tax profits made in Ireland. But it's not easy.

International rules

"The Government has spelled out today that international business won't be impacted by this," according to Investec economist Philip O'Sullivan. "But they're going to have to be very vocal, as other jurisdictions are competing heavily against Ireland for business post Brexit. We have a window of opportunity given the dislocation caused by Brexit and you don't want to have any misunderstandings out there."

Others are even more critical. “Markets react negatively to uncertainty,” according to Killian O’Higgins of real estate advisers WK Nowlan. “We have short memories – we seem to have forgotten that it wasn’t long ago that international investors wouldn’t touch Irish property with the proverbial barge pole.”

Scenting the difficulties, the Opposition parties – those who the Government relies on and the others – will try to make some political hay over this at committee stage, and onwards.

Nowhere is the balance more delicate than in relation to the help-to-buy scheme. Noonan told the Dáil on budget day that he had been assured by the Central Bank that the income tax rebate available to first-time buyers under the scheme would be fully countable in rules obliging most to save 20 per cent of the price of their home.

However he seems not to have run the full scheme past the Central Bank, as governor Philip Lane warned after budget day that the rule under which first-time buyers had to have a mortgage of 80 per cent of the purchase price could encourage over-borrowing. For this reason the Government has cut the limit to 70 per cent. This will mean that more qualify, but also – presumably – that the cost could rise.

But this may not be the end of the changes. Fianna Fáil are pressing for the €600,000 price limit for house purchases that qualify to be cut. This may happen at committee stage, with talk of a cut to €500,000. But in turn this will disappoint a number of new buyers, particularly those in Dublin and other urban areas where prices are higher. Were the limit to be cut further to €400,000 – as Fianna Fáil's Barry Cowen has suggested – Dublin Fine Gael and Fianna Fáil TDs are likely to feel the heat.

With the scheme also facing criticism from economists as likely to boost prices, the help-to-buy scheme is at the centre of the scramble to reach compromises which keep everyone on board – but perhaps leave few enough voters happy. Imagine the angst of a first-time buyer with a contract signed to buy a €550,000 property after the July 19th deadline, who could have €20,000 on the line and is now waiting to see where the limit will be.

A tricky balance also had to be struck in relation to taxing section 110 companies and funds invested in Irish real-estate, the tax avoidance twins which have created such controversy. The section 110 companies were a structure invented to allow the management of international funds in Ireland, one of the bedrocks of the IFSC.

But controversy was inevitable once it emerged that the vulture funds who came into Ireland to buy assets from Nama and the banks were using these structures to avoid paying tax on the income earned from these assets and the profit from their sale. Bad enough that vulture funds were making profits on assets on which the Irish taxpayer had effectively picked up the losses when the State recapitalised the banks, but the fact no tax was being paid here was rubbing salt into the bail-out wounds.

Meanwhile the State was also under pressure to change the rules on Irish real-estate funds, particularly after it emerged that businessman Denis O’Brien had used one of these structures to legally avoid paying tax on the profits earned from the disposal of an office block on Dublin’s Stephen’s Green.

The changes to section 110 were flagged before the budget – and the fact that the tax on funds were going to be addressed was mentioned in the budget itself. This set off what was described as an “ unprecedented” lobbying campaign. The funds sector in Ireland employs 13,000 people out of 38,000 employed in the IFSC overall and creates significant economic wealth. It also generates massive fees for accountants, lawyers and other professionals.

The changes in the Bill are an attempt to meet the political demand to ensure tax is paid on the transactions in question, while at the same time not killing the golden goose that is the funds industry. Government officials have tried to isolate the tax on section 110 companies to catch the vulture funds, and to ensure tax is paid on property transactions made by funds in Ireland, but not when this involves major funds like pensions and life assurance companies.

Exemptions aplenty

One question here is whether the exemptions are so wide that not a lot of extra tax will be collected? Another is whether the section 110 companies and the real-estate funds have been able to arrange their affairs in recent weeks to effectively take profit out before the changes come in? There is a measure in the legislation to stop section 110 companies marking to market – in other words revaluing their assets to their current price and taking profits before the tax becomes effective – on or just before the new rules were announced. Tax accountants will be examining these rules to see how they will work.

They are starting to bring some certainty, but the question remains whether wider damage to the funds sector has been avoided.

According to Pádraig Cronin, tax partner at Deloitte: "The last thing business wants is uncertainty. We now hopefully today have brought an end to that. It is going to take a period of time to reinforce the message that our platform has now been tweaked but that there's more clarity on how it's going to be in future."

Cronin said that the problem emerges particularly in relation to those who invested on the basis of the previous rules, and now face a changed tax picture. “Here you are changing the rules half way through the match.”

O’Higgins of WK Nowlan struck a similar note. “The disappointing feature of the approach is its retrospective impact relative to funds collected and invested over recent years. The investors have no ability to retrospectively reduce their bids for assets acquired to reflect new circumstances.”

It is the politics which pushed through this rule change in an area in which successive governments have generally gone with the wishes of the financial lobby, in a system which has bent over backwards to attract inward investment. It is just another sign of how the “ new politics” is changing the game.