Holly Cairns (Cork South West, Social Democrats)
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240. To ask the Minister for Finance his views on reinstating the home renovation incentive; and if he will make a statement on the matter. [4517/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Home Renovation Incentive (HRI) was introduced by Section 477B of the Taxes Consolidation Act 1997 in 2014 and was terminated in accordance with its statutory sunset clause on 31 December 2018 having been extended twice before that and having been seen to have met its original objective viz. support for job creation in the construction sector in the wake of the financial crisis.

An ex-post analysis of the scheme found that in the context of a housing supply shortage, and the need at that time to deliver 25,000 additional housing units per annum over the period 2017-2021, the potential for displacement of labour from work on new builds to work on home renovations would create a high opportunity cost of labour associated with HRI which was not present at the inception of the scheme. Given the continued constraints on the construction sector’s ability to hire labour to deliver a supply of new housing units, similar issues may arise currently with regard to any re-introduction of the scheme.

The proposal in the Deputy's question would also give rise to additional Exchequer costs. Under my Department's Tax Expenditure Guidelines, the introduction of new tax incentive measures, or the continuation of measures which are due to terminate, should only be considered in circumstances where there is a demonstrable market failure and where a tax based incentive is more efficient than a direct expenditure intervention.

Having regard to these considerations, the case for re-introducing the HRI along the lines mentioned by the Deputy is not a strong one from the perspective of my Department.