Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment No. 38:

In page 30, between lines 25 and 26, to insert the following: “Report on Landlords’ Tax Relief

22.The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on the introduction of the new personal income tax allowance introduced with respect to individual landlords in the private rental sector, assessing its distributional impact, deadweight loss of the relief and implications for social equity within the personal taxation system.”.

This is an issue we have debated at length on Committee Stage. This is the first Fianna Fáil budget in many years and the priority is clear. Whether it is renters or mortgage holders, the big winners are landlords. We spend more of taxpayer's money providing support to landlords. This is a tax break that will not work. That is not just my view but the view of many others. It is a tax break that does not make any sense. It provides a tax break of €600 next year for landlords, €800 the following year, €1,000 the following year and €1,000 beyond that. It is clear it has massive deadweight. Most landlords are not thinking of selling, but despite this they will get this tax relief. For those who are considering selling, this tax relief is less than the inflation we are seeing in house prices. House prices are increasing way beyond this relief. Therefore it will not be a significant factor in that issue.

As I said, the Minister's officials were clear on this. The Department's officials said in a note this year "taxation of rental income is often cited as a push factor for Buy-to-Let investors". The way in which rental income is taxed for tax purposes has not changed. Personal rates of income tax have always applied to rental income. Landlords have benefited from the changes to the personal taxation system every year. The effective rate of tax a landlord pays is less now than it was ten years ago. The officials from the Department further said, "Any favourable treatment of passive personal income such as rent would raise legitimate questions around social equity", something the Minister seems not to care about. That is at the core of this.

The Minister will argue that landlords are fleeing the market and therefore we need to bring this tax relief to them, despite the fact the vast majority of them have no intention of going. I would make the point that there are nurses all over the world who have fled because of what the Government has done to the health service. It is worse now because even the ones who want to come back will not be allowed to do so because a recruitment embargo is in place. There is no special provision for them. There is no reduction in their income tax, even though we need more nurses in our health system. There are many other similar areas. The Government has decided to tax a nurse, teacher or carer more than a landlord, which is appalling.

The Department officials went further when they assessed the option of a separate method of taxing rental income, such as a flat rate, a separate rate of tax and other tax reliefs. The Department noted:

The breadth and depth of argument necessary to support such a fundamental shift of policy has not been provided to the extent necessary to support such a significant change. More specifically, [they said] the rationale as to why passive income from property rental should enjoy a lower or preferential rate of tax as compared with the example of earned income has not been set out.

That does not matter because Fianna Fáil has made the decision it is supporting landlords, it is on the side of landlords and it is bringing forward tax reliefs for landlords. That is what we have before us. The Government did not heed the advice and we have this situation before us.

On the policy rationale, a survey by the Society of Chartered Surveyors Ireland found that the top three reasons for landlords leaving the rental market were the complex and restrictive nature of rent regulations, landlords finding compliance with rented houses too onerous, and net rental returns being too low. Furthermore, the Department of Finance, the Minister's officials, whom he is ignoring, said:

In the case of accidental landlords, it is difficult to envisage any reasonable policy intervention that could dissuade such people from selling their property. People in this situation are keen to sell once they have escaped negative equity and public policy options to prevent such actions are extremely limited.

They go on and on and make the point. They say the consequence of the policy changes is that the amateur landlords who may not have had the time, money or risk appetite to continue with their property in such an environment, namely, an environment of high house prices, is that they are selling up. That is the reality.

Professor Barra Roantree, formerly of the ESRI, said the following of this tax break, which would cost between €100 and €150 million, and we know now it is at the higher end of that. He said that the vast majority of the tax relief is going to landlords who never even thought of leaving the market. It is, in his words "maybe the stupidest tax relief of recent times". That is the reality. The Minister decided to ignore all of that, put it by the wayside and bring forward a tax relief of up to €1,000 in future years for landlords at a cost of hundreds of millions. The problem is it will not work. Landlords are leaving because the Minister's policies have ensured the average house price that landlords can get is €70,000 more than when this Government took office. They are cashing in and €1,000 will not make a difference to them. I do not know what the Government is doing here. What it is doing makes no sense.

This is public money and it could go into disability services, for example. Twice as much money is going to landlords as is going to those services. The Government's priorities are all wrong in this. If this was in any way going to encourage landlords to stay and so on, then at least we could have a proper debate about it but it is not. The Minister's officials were clear to him on this. I mention Fianna Fáil, Fine Gael and the Minister for housing, who is drowning on this issue. Everything is going wrong for him and he cannot even meet his targets for social housing, affordable housing or cost-rental housing. He is missing every single target year after year. This is another initiative which is wasting taxpayers' money instead of using it. The following is a novel idea.

Why not use that money to build houses on public land? That is what the Government should be doing with the money instead of putting it into the pockets of landlords.

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