Sir, - A handful of landowners and developers in the greater Dublin area are set to make a killing out of the Finance Bill announcement that capital gains tax on development land is to remain at the permanently low rate of 20 per cent.
These developers are set to make large windfall gains as Dublin will grow by a third in size over the next 10 years, according to the Strategic Planning Guidelines. That growth will mean additional costs to the whole community in the provision of schools, roads, public transport and electricity to serve the new neighbourhoods. But the developers will have sold on and made their profit, with a minimal contribution towards the cost of these new services. Meanwhile in Dublin Castle, one tribunal is investigating planning irregularities resulting in massive gains for certain Dublin developers, while another tribunal has spent the past week examining the astounding growth in the value of Haughey lands and how this was treated for tax purposes. In these circumstances, the decision by Fianna Fail to reward land speculators with a permanently low tax rate is to thumb the nose at the tribunals. This decision by Fianna Fail is of a piece with its insistence on maintaining corporate party donations. Those building sector interests who so generously fund the party look set to receive their reward through this Finance Bill.
The rationale given for a temporary lowering of capital gains tax from 40 per cent following the first Bacon report was to discourage hoarding of development land. This carrot was to be followed by the stick of raising capital gains tax on development land post 2002. But housebuilding is actually slowing down in the greater Dublin area, down almost 3 per cent on last year, and land hoarding continues apace. These tax measures now further reward such hoarding. The likely result is a further slowing down of the release of land for development, increasing its scarcity value and pushing up house prices.
The windfall gains to be made out of Dublin's expansion should be recycled for the benefit of the community as a whole. That can be achieved either through a levy system on the unearned gains, as recommended by the Dublin local authorities in their report "Housing in Dublin", or by finally implementing the Kenny Report proposals for taking development land into public ownership at a multiple of existing use value. - Yours, etc.,
Eithne Fitzgerald, Labour Party Spokesperson on Dublin, Clonard Avenue, Dublin 16