Row erupts over tax break on land sales
A ROW erupted last night over tax incentives introduced in 2000 to encourage the release of land for development and housebuilding.
The Government insisted yesterday that it did not lose out on revenue because of the scheme.
It said it had received extra income due to increased land sales because of the incentive, which reduced the rate of tax on the sale of development land from 42pc to 20pc.
But Labour Party finance spokeswoman Joan Burton said the Government had lost out financially over the duration of the incentive.
Figures from the Revenue Commissioners show that, at the 20pc rate, it received €1.09bn.
Had the rate of 42pc applied, the figure would have been more than €2bn -- but it is not clear what amount of land would have been sold had the higher rate applied. The Department of Finance insisted the Exchequer did not lose out as a result of the reduction in the rate.
"The rate of tax at the time was 20pc and not 42pc," a spokesperson for the department said yesterday. "We couldn't have lost out."
Ms Burton said the Government had lost out on revenues overall. "The Government lost out in the long term. The tax breaks resulted in land outside town being sold by farmers."
She added that this had resulted in increased land prices, which fuelled the boom.
The tax rate was reduced at a time when the economy was growing at a rate of over 9pc annually and there was demand for new housing. It applied from 2000 to 2007.
Revenue Commissioners' figures show the amount of income returned from residential development land sales was over €5bn in this period.