Michael Healy-Rae (Kerry, Independent)
Link to this: Individually | In context | Oireachtas source

183. To ask the Minister for Finance his views on matters raised in correspondence (details supplied); and if he will make a statement on the matter. [45331/22]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

At the outset, the Deputy should note that recent Government policy has focused on strengthening the environmental rationale behind company car taxation. Until the Finance Act 2019 Ireland’s vehicle benefit-in-kind regime was unusual in that there was no overall CO₂rationale in the regime, despite a CO₂based vehicle BIK regime being legislated for as far back as 2008 (but never having been commenced). Section 6 of the Finance Act 2019 legislated for a fundamental overhaul of the regime which brought in discount and surcharge rates based on a car’s emissions profile, and is due to commence from 1/1/2023.

There have been arguments surrounding the mileage bands in the BIK structure as they can be perceived as incentivising higher mileage to avail of lower rates, leading to higher levels of emissions. The rationale behind the mileage bands is that the greater the business mileage, the more the car is a benefit to the company rather than its employee (on average); and the more the car depreciates in value, the less of a benefit it is to the employee (in years 2 and 3) as the asset from which the benefit is derived is depreciating faster. Mileage bands also ensure that cars more integral to the conduct of business receive preferential tax treatment.

The new system takes account of these environmental concerns by reducing the mileage bands from five to four, thus weakening any perverse incentives of increasing mileage to reduce tax liability while still seeking to apply the tax in proportion to the quantum of benefit derived from the car. The new structure with CO₂-based discounts and surcharges provides a broad structure to incentivise employers to make greener choices when providing employees with company cars; the system will mean that low-emission vehicles and any EVs that are liable for a BIK charge will benefit from a preferential rate ranging from 9 - 22.5%, depending on mileage. Conversely, high emissions vehicles will be subject to higher rates of BIK. This will bring the taxation system around company cars into step with other CO₂-based motor taxes as well as the long-established CO₂-based vehicle BIK regimes in other member states.

In addition, Ireland currently has a BIK relief for electric vehicles which is due to continue until end 2025. Further details are available on the Revenue website.

Claire Kerrane (Roscommon-Galway, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

184. To ask the Minister for Finance if he intends to extend eligibility for the help-to-buy scheme to pre-owned homes for first-time buyers in rural areas given that the availability of new homes is much lower in rural areas than in rural areas and therefore current scheme guidelines may reduce accessibility to the scheme for first-time buyers in rural communities; and if he will make a statement on the matter. [45347/22]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Help to Buy incentive is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund on Income Tax and Deposit Interest Retention Tax paid in the State over the previous four years, subject to limits outlined in Section 477C Taxes Consolidation Act 1997.

An increase in the supply of new housing remains a priority aim of Government policy. For this reason, HTB is specifically designed to encourage an increase in demand for new build homes in order to support the construction of an additional supply of such properties. For a property to qualify for HTB, it must be new or converted for use as a dwelling, having not been previously been used as a dwelling.

A move to include properties which previously used as a residential home/second-hand properties within the scope of the scheme itself would not improve the effectiveness of the relief; on the contrary, it could serve to dilute the incentive effect of the measure in terms of encouraging additional supply. Extending the HTB scheme in this way would provide no incentive effect to encourage the building of new homes and would be likely to have a significant dead-weight element and a high Exchequer cost.

As the Deputy may be aware, a review of the scheme has been undertaken by external consultants. Following that, decisions about the future of the scheme beyond its current sunset date of 31 December 2022 will be taken in the context of Budget 2023.

As we are less than two weeks out from the Budget, it would be inappropriate for me to offer further comment on the matter at this time.