Thursday, 16 December 2021
Department of Finance
114. To ask the Minister for Finance the reason the rate of tax under the proposed residential zoned land tax will be applied at 3%; if he will consider increasing the rate applied; and if he will make a statement on the matter. [62331/21]
132. To ask the Minister for Finance the reason the rate of tax under the proposed residential zoned land tax will be applied at 3%; if he will consider increasing the rate applied; and if he will make a statement on the matter. [62366/21]
I propose to take Questions Nos. 114 and 132 together.
The rate of Residential Zoned Land Tax is set at 3% on its commencement in 2024. I have chosen this rate as I believe great care needs to be taken to get the balance right between it achieving its essential purpose of encouraging the release of land for housebuilding purposes, but at the same time not being too penal, so that it runs the risk of being challenged in the courts.
My fear is that if I were to apply a higher rate from the outset, it could change the economics of making a return on capital invested in the land as a business asset, and may make some businesses unviable. Such an approach I believe would be counterproductive and damaging to the goal of meeting the Government's house building objectives over the next number of years.
In summary, I believe it is important to see how the tax operates and then make an assessment as to whether it is working. If it is not leading to an increase in land being released for housing purposes, I will have no hesitation in reviewing the rate, if I deem it likely that this will help the situation.