Thursday 21 November 2019

'Granny flat grant' is latest proposal pitched for Budget

  • House conversion relief pitched to help empty-nesters in downsizing

  • Independents focus on pensioners amid growing tensions with Fine Gael

  • Cabinet row as Fine Gael accused of 'screwing' small businesses with hike to special VAT rate

Finance Minister Paschal Donohoe. Photo: Gareth Chaney/Collins
Finance Minister Paschal Donohoe. Photo: Gareth Chaney/Collins

Philip Ryan, Kevin Doyle and Gavin McLoughlin

A grant for an elderly person to convert their home into two separate housing units is now a key demand of Shane Ross's Independent Alliance as Budget talks intensify.

The Independent group in Government with Fine Gael is firmly focused on the grey vote, having previously demanded a 'granny grant' for family members who provide childcare.

That idea is off the table so the Independents now want a grant for 'empty-nest' pensioners in under-occupied family homes, labelled a 'granny flat grant'. The move would be pitched as a way to help the housing crisis by encouraging older people to downsize and help them afford to stay in their houses.

But tensions are mounting as Independent ministers are frustrated with the shape of the Budget. A row broke out at Cabinet when Disabilities Minister Finian McGrath accused Fine Gael of trying to "screw" small businesses with a hike to the special 9pc VAT rate in the tourism sector.

The new 'granny flat grant' idea has been tabled by the group of ministers including Shane Ross who previously pushed the 'granny grant'.

It is now widely accepted that the much-publicised proposal for a €1,000 a year 'granny grant' for grandparents who provide free childcare is a non-runner.

New proposals: Transport, Tourism and Sport Minister Shane Ross is pushing the ‘granny flat grant’ plans. Photo: Mark Condren
New proposals: Transport, Tourism and Sport Minister Shane Ross is pushing the ‘granny flat grant’ plans. Photo: Mark Condren

But instead, the Alliance has put forward a raft of new initiatives aimed at meeting the needs of older people.

The group's pre-Budget submission highlights the renovation grant idea, for splitting the homes of older people into two separate units.

The document says the grant would be for "converting under-occupied family homes" into "self-contained ground floor accommodation suitable for the needs of the older home owner" while the upstairs area would become a rented apartment.

This would provide an additional income for an older person who might otherwise not consider taking in a lodger.

Another proposal is to reduce stamp duty on houses purchased by older people if they are smaller than their previous property. The Alliance is also calling for the introduction of new incentives to encourage developers to provide a certain amount of properties for downsizers.

However tensions are high as Budget talks go to the wire.

Three sources confirmed to Independent.ie that Mr McGrath interrupted a discussion on foreign investment at Cabinet yesterday to complain that hiking the special 9pc VAT rate would be "screwing restaurants and B&Bs".

He asked Business Minister Heather Humphreys what feedback she had got from companies. One source said: "He was totally out of order but nobody responded."

Finance Minister Paschal Donohoe plans to raise the VAT rate by at least 2pc in order to collect an extra €500m next year. The move is facing major resistance from the hospitality sector which benefits from the special rate.

Newsbrands, the umbrella group for most the print and online media, has also launched a campaign aimed at reducing VAT on newspapers and magazines.

The Independent Alliance is not opposed to removing the special rate for larger hotels - but wants protections put in place for smaller businesses.

Discussions between Mr Donohoe and the group, including Mr Ross, will continue this week.

The Independent Alliance is set for one big win with sources confirming that betting tax is set to double.

Attempts by Junior Minister John Halligan to have the levy hiked in previous budgets have been rejected.

However it is now set to double from 1pc to 2pc, bringing in an extra €50m a year. Some of this money will be ringfenced to fund gambling addiction services, while the rest will be fed into the Exchequer.

Meanwhile, overspending in the Department of Health is to cause a further headache for Mr Donohoe as he crunches the numbers.

Spending is €300m ahead of target for the first nine months of 2018 - compared to being €166m ahead of target at the same point last year.

The figures are contained in new Exchequer returns, which show the tax take is broadly on target. Some €37.5bn of tax was taken in the first nine months - 5.2pc ahead of 2017.

The increase has been fuelled in part by a 10.5pc jump in corporation tax compared to 2017. Income tax and VAT are up 6.8pc and 5pc respectively this year - albeit slightly behind target.

But Peter Vale, a tax partner at Grant Thornton, said the figures were solid overall. "There is nothing in today's figures that should cause the minister to reshape his thoughts in advance of next week's Budget."

Irish Independent

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