Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

This year, landlord tax relief is provided for. We talked about mortgage interest relief earlier and how the Minister would lock out 130,000 people with his proposal. It is important to remember that landlords are able to avail of mortgage interest relief of 100%.

The Minister has brought forward a proposal that provides twice as much money to landlords as to tenants, a proposal that provides more money to landlords than to mortgage holders. It makes absolutely no sense but it is typical of Fianna Fáil. This is the first time in a while that we have had a Fianna Fáil Minister for Finance, and voilà, he introduces a tax measure that benefits landlords. The worst thing is that it is not going to work. It is dressed up in the idea that it is about retaining landlords in the system, yet all the evidence, including from the Department, makes it very clear that taxation is not the reason landlords are leaving the sector. The Department makes it very clear, stating the taxation of rental income is often cited as a push factor for buy-to-let investors. It states that the way in which rental income is treated for tax purposes has in fact not changed and that personal rates of income tax have always applied to rental income. It states that landlords have benefited from the changes to the personal taxation system every year. It goes further by stating any favourable treatment of passive personal income, such as rent, would raise legitimate questions around social equity. That is the core of the issue.

Today, our party leader was addressing the Taoiseach regarding the housing crisis and the fact that schools cannot recruit 800 teachers. Some of those teachers are in Dubai and elsewhere because they cannot afford housing here. There is no provision coming from the Minister to help them. Managers in general hospitals across the State will talk about the difficulty in recruiting nurses. One will see many of our nurses in Melbourne, Sydney, Canberra, Toronto in Canada, and even in London. There is no provision to support their incomes. There are no sweetheart tax deals for nurses or teachers. For the first time, the Government has broken the link regarding how taxation is applied to rental income, which the Department says would raise serious, legitimate questions around social equity. It does exactly that.

The Department went on to say that the breadth and depth of argument necessary to support such a fundamental shift in policy has not been provided to the extent necessary to support such a significant change. More specifically, the rationale as to why passive income from property rental should enjoy a lower or preferential rate of tax than that applied to income earned, for example, has not been set out. The Minister should have listened to his officials. What Fianna Fáil has done, and what Fine Gael has been doing for the past several years, with the Green Party towing the line, unfortunately, has provided a benefit to landlords. This is not going to work. A former professor in the ESRI said it is the stupidest tax relief he has seen in years and that there is stiff competition. He is absolutely right about this.

Rental income has increased by 25%. Rents have increased by 25% since Deputy Michael McGrath became a Minister. The amount landlords can offset through mortgage interest relief has increased from 80% to 100%, yet the Minister comes forward with a proposal that benefits landlords once again – a proposal that will not only benefit them next year but also increase the following year and the year thereafter. More than likely, if the Minister is returned to government, he will try to extend it again and again.

Why are landlords cashing out? There has been research done on this. Landlords have given three reasons for cashing out. The primary one is that house prices have never been so high. As I stated before, €70,000 is the amount by which the price of a house has risen, on average, since Deputy Michael McGrath became Minister. Accidental landlords are cashing out as a result. There is also a tax reason because, when Fine Gael was in government, it brought forward a capital gains tax measure that means it is beneficial to cash out. At the core is an issue of equality. I genuinely ask the Minister why he would do what he is doing. He will argue that it is about retaining landlords in the market. The most a landlord would have to pay back if he or she left before the end of the four years would be €3,400. He or she would not get the last €1,000 if he or she left within the four years. Since the Minister took office, house prices have been increasing by about €1,700 every fortnight. Landlords would just have to wait a month to be no worse off. In two months, they would be better off because Fianna Fáil, Fine Gael and Green Party policies continue to push up house prices, as we have seen. Across Europe when interest rates rise, house prices normally reduce. This is happening elsewhere but not here because we have Fianna Fáil and Fine Gael in government.

Where is the targeting in this? How much will it cost? It will be €170 million, twice what is being given to renters and more than what is being given to mortgage holders? It is not going to work. The experts in the Minister's Department have told him this but he has completely ignored that. It is what Fianna Fáil does best: looking after landlords and not understanding the core of the problem and dealing with the core issue. Maybe the Minister can argue that the taxation of landlords has increased over the past year, that his Department's officials are wrong and that tax on rental income is reduced every year because of changes to personal income tax and because of the offset of mortgage interest relief from 80% to 100%.