First-time buyers have been hit the hardest by tax reliefs on property, the Labour Party claimed today.
Labour spokesman on the environment Eamon Gilmore said that when the Government had abolished the first-time buyer's grant, they were subsidising investment in property to the tune of €2.3 billion at the same time.
"Unfortunately it's young workers, trying to buy a home of their own that have paid for the Government's largesse, while a small number of very wealthy individuals have made a killing," Mr Gilmore said.
"There is a clear link between the property tax reliefs handed out to the super-wealthy by the Government and escalating housing prices," he added.
However, the Minister for Finance Brian Cowen defended the tax-relief schemes, saying that they had been been brought in by successive governments for good reasons.
"There was a time when there was 18 per cent unemployment in this economy, there was a time when the construction industry was employing a third of what they're employing at the moment. There was a time we didn't have the capital available because of our public finances in order to do any of these things," Mr Cowen said on RTÉ radio this morning.
"In their time they [tax relief schemes] all made a positive contribution," the Minister said.
A review published yesterday by the Department found that a relatively small group of high-income individuals had benefited in recent years from approximately €3 billion in tax reliefs arising from Government-promoted schemes.
The urban renewal scheme, designed to promote the development of certain designated urban areas, was the most expensive of the schemes reviewed. It resulted in €1.43 billion in taxes forgone, arising from investments made under the scheme from 1999 to July of this year, when it ends.
The review found that the scheme was benefiting investors in property developments that would have been built anyway. Yet the tax breaks could represent up to 43 per cent of the cost of the buildings.
Although many of the tax relief schemes were discontinued in Mr Cowen's Budget, he refused to rule out introducing more such schemes in the future.
"With the property market the way it is and the contribution that the construction industry makes towards employment we need to find a soft landing and to make sure that we don't abruptly chop down the application of these reliefs that are available," he said.
He said that there were ways and means by which targeted reliefs can be looked at in the future in respect of particular areas or sectors of the economy.
"We shouldn't close off in principle the subject of tax relief schemes if there are required, but I agree there should be a cost-benefit analysis done, and it should be time limited to three or five years," the Minister concluded.
