Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

The windfall tax was introduced for two reasons. The first was that individuals made huge gains as a result of the rezoning of land and it was deemed appropriate that some of those gains would be recouped by the State, while the second reason was to serve as an anti-corruption measure. I mentioned at this committee previously that one would hope that local authority members, elected by the public, who engaged in the rezoning of land for the benefit of individuals who may have been connected to them or supportive of them is a thing of the past. However, it may not be a thing of the past and, indeed, we cannot actually ensure that it is so. In that context, we need to make sure that adequate preventative mechanisms are in place to make such behaviour less appealing.

There have been media reports recently relating to local authorities, planning permission and so forth which I am sure will be investigated by the relevant authorities. I believe that the ending of the windfall tax, which was 80%, and just applying the appropriate levels of taxation is not the proper way to do this. I believe that the windfall tax should have continued to exist at a reduced rate of 41%. However, I also believe that the scrapping of this tax should only apply for a couple of years. I say that because the windfall tax sends a signal to local authority members that they should not try to rezone lands for the benefit of individuals. Furthermore, a key priority for the Government at the moment is to release land for development which is probably the primary motivation for scrapping the windfall tax. Indeed, that is the same motivation behind the Sinn Féin suggestion that the tax be cut in half. We want to incentivise people to release land at this point in time but by allowing this to be open-ended, such an incentive does not exist at this point in time. Given the fact that land prices are recovering, the removal of the windfall tax actually acts as a disincentive. The incentive at the moment is to hold onto land, wait until the market improves further and then sell it on without having to pay a windfall tax. If the Minister were to introduce an amendment to this Bill to provide that the removal of the windfall tax would be for two years or some other specified period, that would incentivise people to release their land now, regardless of the rates. The rates are a separate issue. It would be open to the Government at a later stage to then decide if it wants to extend the period or not, depending on whether the measure was effective.

There are time-limited provisions throughout this Finance Bill in many different guises. The special rate of 4% USC for medical card holders is only extended by a couple of years, the VAT rebate under the home renovation scheme is time limited and the tax cut for high earners by way of SARP has only been extended for a couple of years. Yet, when it comes to the windfall tax., there is no Cinderella clause included. There is no cut-off period. The provision, therefore, will not be as effective as it could have been had the Minister placed a 24-month time limit which would incentivise people to release land now, particularly around our capital and in other cities. Such land is much needed for development purposes to deal with the current housing crisis, in both the social and private housing sectors as well as the rental market.