The Taoiseach told the Irish Congress of Trade Unions (Ictu) three months ago that the Government would implement a more extensive programme of mortgage interest relief for homeowners than actually materialised in the Budget.
In a letter to Ictu general secretary David Begg on September 14th, Bertie Ahern wrote that the ceiling on mortgage interest relief would be increased significantly for first-time buyers and all those who had bought houses in the past seven years.
Mr Ahern said that this would be raised from €8,000 to €10,000 for single people and from €16,000 to €20,000 for couples or widowed persons and that a commitment to introduce these measures as part of Budget 2008 was contained in the programme for Government.
However, in his Budget speech Mr Cowen said these increases in the ceiling on mortgage interest relief would apply only for first-time buyers.
The Minister made no mention of the measure also applying retrospectively to anyone who had purchased a house in the last seven years as set out in the Taoiseach's letter to Ictu.
In a statement to The Irish Timeslast week the Department of Finance confirmed that the mortgage interest relief measure in Budget 2008 related only to first-time buyers.
A first-time buyer in the context of the relief is a person who is entitled to mortgage interest relief in respect of their home for the tax year in which a mortgage is first taken out and six tax years thereafter.
However, the first-time buyer status is not specifically related to a first residence. The residence can be changed within the seven years. This has been the position for many years. The Budget measure will therefore also be of value to those who extend or trade up in the early years of home ownership, it stated.
A spokesman for the Taoiseach said that the correspondence between Mr Ahern and Mr Begg related to the two parties involved. It would not be appropriate to deal with the issues raised in the correspondence outside of this relationship, the spokesman said.
The spokesman said that if Mr Begg wanted to clarify any issue he could contact the Department of the Taoiseach directly.
At a press briefing after the Budget, Mr Begg signalled his deep unhappiness with the measures introduced by the Government.
He said that there was nothing in the Budget for his constituency of workers.
Ictu had specifically proposed the issue of increasing the ceiling on mortgage interest relief earlier in the year as a means of counteracting the effects of rising interest rates for homeowners.
In the early summer when inflation hit the 5 per cent mark there was speculation that the trade union movement would seek to renegotiate the level of pay rises awarded under the current national agreement, Towards 2016.
The national pay deal provided for increases of 10 per cent over 27 months and there were fears that these would be virtually eroded in full as a result of an inflation rate running at about 5 per cent.
However, the union leaders instead pushed for increases in the level of mortgage tax relief to homeowners or reductions in the rate of VAT as part of an action plan to tackle inflation.
