Oireachtas Joint and Select Committees

Tuesday, 16 November 2021

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach

Finance Bill 2021: Committee Stage

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

The reason the help-to-buy scheme has a role to play in our tax code is I believe it is appropriate that our tax policy gives help to somebody who is buying his or her first home, particularly when that first home is a new build, thereby leading to additional supply.

There is a difference in philosophy between Sinn Féin and me on this. Sinn Féin believes that people are looking to buy their first home, they should not get any help in doing it; I do. It has been a long-standing feature of our tax policy. There have been many other ways of doing this over the past number of years. The help-to-buy scheme is the latest version of it. I accept the point that when the scheme was brought in in 2016, it was intended to be a temporary measure in terms of its design. I will look fundamentally at its operation this year to decide whether there are better or new ways of meeting the aim of helping somebody with a contribution to the cost of buying his or her first home, only when that first home is a new build thereby driving supply. There is a difference in philosophy and approach between the Government and Sinn Féin on this. Sinn Féin does not believe help is needed or merited; I do.

Regarding the charges that are made against the scheme, I am aware, of course, of the studies that indicate that up to 40% of people had their deposit assembled before they went to buy their home but every tax measure brought forward will supply some help to those who do not have a great need for that help. Every tax measure that I bring forward will do that. Let us examine the range of Sinn Féin proposals in that regard. Sinn Féin wants to abolish the local property tax. Many people would not need the money from the abolition of the tax but would still benefit from the move. Sinn Féin is aware of this. The party still advocates it. Any tax policy will confer a benefit on those who need it less than others but even using the figures that Deputy Farrell outlined, a majority of people needed some help in assembling the deposit for their first-time home.

I believe that tax policy has a role to play in this, in particular, given that we are talking about a tax policy that only makes this help available if a new home is being built. This would be a very different argument if this was a policy that was available for existing homes that are already built, but it is not.

Regarding the inflationary charge that is levied against this policy occasionally, of course, I fully understand the inflationary pressures under way in the housing market. I fail to see how those pressures are made any more easy to deal with for those who are trying to buy their first home by the removal of the help-to-buy scheme, but dealing with that argument on its own terms, 12.7% of all house transactions last year were covered by the help-to-buy scheme. That does not speak to an impact on transactions that, of itself, is causing house price inflation.

On Deputy Farrell's point regarding this being drawn down in parts of the country less associated with house price inflation, I imagine the reason for that is this policy is also available for self-builds. If Sinn Féin policy now is that if people are building their own homes they should not benefit from the help-to-buy scheme, I guess that is consistent with its abolition overall but there is an issue of equity between people who are living in cities or in our large and urban communities and those who are looking to build their own home in our rural communities. I think that is the reason there is a variation in the drawdown of the help-to-buy scheme in the counties the Deputy mentioned.

Deputy O'Donnell raised the living city initiative, which is due to come to an end, as he stated, at the end of next year. The Department will review this measure well in advance of then. The Deputy has had engagement with my officials, which has been mutually beneficial. It has been helpful for us as well. Of course, he will raise this matter in the Dáil on Report Stage. If we want to look at how we can consider this issue expeditiously in a way that might influence the budget for next year, a cross-departmental review is not the way to do it because we would only end up with lots of different views. There is many an enthusiasm that has gone into a cross-departmental review and spent many years in it. I understand the Deputy has some technical suggestions he thinks could make a difference to the scheme. I assure him that they will be fully evaluated before we get to next year's finance Bill. My officials and I will engage with him on this matter in the early part of next year and give his ideas the consideration they deserve.

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