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

The previous tax relief in respect of rent paid was abolished in budget 2011 and it ceased to be available to those who commenced renting for the first time from 8 December 2010. This followed a recommendation in the 2009 report by the Commission on Taxation that rent relief be discontinued. The view of the commission then was that, in the same manner in which mortgage interest relief increases the cost of housing, rent relief increases the cost of private rented accommodation. Accordingly, the result of reintroducing this relief would be a transfer of Exchequer funding directly to landlords, which would not have the intended effect of reducing the pressure on tenants.

In addition, a tax credit of this nature would be of little benefit to lower income workers, the unemployed and students, who would not receive the benefit of the relief as they may not be paying sufficient levels of income tax.

At the time of its abolition, the rental tax relief cost the Exchequer up to €97 million per annum. It is likely that this figure would be higher today were a similar scheme to be put in place.

Proposals for new tax incentive measures are assessed in accordance with my Department's tax expenditure guidelines. These make clear that it is important that any policy proposal which involves tax expenditures should only occur in limited circumstances. In particular, they provide that a tax-based incentive should only be considered where it would be more efficient than a direct expenditure intervention.

The Government's Housing for All plan is intended to, and will deliver, more homes of all types for people with different housing needs, including those who want to rent at an affordable price. The Government has committed to, among other things, an average of 2,000 new cost rental homes every year, with targets of rents being at least 25% below market level, as well as a rent value freeze to 2024 by linking any increases in rent pressure zones to inflation. Therefore I do not propose to accept this amendment.