Róisín Shortall (Dublin North West, Independent)
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278. To ask the Minister for Finance the purpose and reasoning, and the evidence supporting this reasoning, for the decision to remove the 80% windfall tax applying to chargeable gains on the disposal or development of land which are attributable to planning decisions made since October 2009; and if he will outline the bodies or persons who lobbied him, his party or his Department seeking such a decision in advance of the budget. [41210/14]

Michael Noonan (Limerick City, Fine Gael)
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The windfall tax provisions are contained in Sections 644AB and 649B Taxes Consolidation Act (TCA) 1997, introduced by Section 240 National Asset Management Agency Act 2009 and amended by Section 25 Finance Act 2010, and apply an 80% rate of tax to the windfall profits or gains from land disposals or land development where those profits or gains are attributable to a relevant planning decision by a planning authority. Profits or gains from these activities that are not attributable to a relevant planning decision are taxed in the normal way. In Budget 2015, I announced the abolition of the windfall tax provisions from 1 January next and this is being provided for in the Finance Bill published last month.

The Construction 2020 Strategy for Ireland Report published in May 2014 focuses on the steps that can be taken in the immediate future to ensure that necessary and sensible development can take place in the construction sector and that such development is not held back by unnecessary obstructions. One of the action points in the Report requires consideration of the tax code as it applies to the construction and property sector to establish if they are fit for purpose and otherwise  to improve, abolish or replace them.

In that context, my Department and the Office of the Revenue Commissioners undertook a review of the windfall tax provisions as part of this year s Budget and Finance Bill process. In the course of that examination, the views of the Department of the Environment, Community and Local Government and of the National Asset Management Agency were sought on the provisions and the views on the windfall tax as expressed by bodies such as the Housing Finance and Sustainable Communities Agency were also considered. Arguments for the significant amendment or abolition of the windfall tax provisions were made in a number of pre-Budget submissions sent to me by various bodies, including the Construction Industry Federation, Dublin Chamber of Commerce, the Society of Chartered Surveyors, Property Industry Ireland and Chambers Ireland.

There are a number of reasons why, on foot of the review by my Department and the arguments made by others, that I decided to abolish the windfall tax provisions. No gains or profits to which the current provisions apply have been returned since their introduction in 2009. While this is due largely to the lack of activity in the property market over much of this time, there is considerable doubt that the provisions would operate in an effective way on the ground or could be amended to operate effectively.More significantly, however, the views which I have seen expressed by various parties in both the private and public sector with an interest in the proper development of the housing market, and with which I agree, are that the windfall tax provisions are acting and will act as an impediment to land rezoning, land development and redevelopment and to land sales for development.

The abolition of the windfall tax provisions should be seen in the context of other decisions and proposals announced recently, including those by my colleague the Minister for the Environment, Community and Local Government, which are focused on encouraging increased activity in the residential construction sector to meet increasing demand for housing. I indicated in my Budget speech, however, that while the Government is doing its part to remove impediments to a fully functioning property market, there will be no return to the past where tax incentives for developers drove supply. I also announced in the Budget that there will be a consultation in the coming months on taxation measures that might be introduced to address the issue of land owners who do not develop zoned and serviced land.