Concrete levy to be cut to 5% and delayed until September next year

A concrete levy will be in place for “for the foreseeable future”, according to Minister for Finance Paschal Donohoe, who has confirmed that the extent of the measure proposed in the budget to pay for mica building defects would be halved to 5 per cent in this week’s Finance Bill.

The introduction of the levy is also being delayed from April next until next September and its scope reduced, with Mr Donohoe saying it would be applied to concrete blocks and pouring concrete but not to precast concrete, in an effort to protect Irish exports of such products.

Speaking at a press briefing on Tuesday, Mr Donohoe said the levy is expected to raise €32 million annually to offset some of the State’s expected €2.7 billion bill for recompensing homeowners who bought houses built with faulty concrete contaminated with the mineral mica.

The original 10 per cent levy proposed in the budget was expected to raise more than €80 million annually, but the plan faced fierce resistance from the building industry, which said it would make new homes even more expensive, and Government backbenchers concerned about inflation.

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Mr Donohoe said the levy would add between 0.2 per cent and 0.35 per cent to the cost of building a three-bedroom home, and up to 0.2 per cent to the cost of an apartment. The levy will also apply to any imported blocks that are used for building in the State in an attempt to prevent local construction companies buying concrete from Northern Ireland to get around the 5 per cent charge.

There is no “sunset clause” on the levy, the Minister said, and it will be in place as a long-term measure to help the State recoup the costs of the building defect redress schemes.

Mr Donohoe also rejected criticism from the economic think tank, the Economic and Social research Institute (ESRI), which suggested that the levy be scrapped and the cost of redress funded instead from windfall corporation taxes.

“The ESRI is also the organisation that has been at the forefront of warning against relying on corporation tax revenues,” he said.

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Mr Donohoe also confirmed that a €500 tax credit for renters, also announced in the budget, is to be extended in the Finance Bill to parents who cover rent for children attending third-level education, so long as the tenancy is properly registered.

Tánaiste Leo Varadkar said the remediation of defective homes “is a multiyear, multibillion euro commitment” which could not be made without a commitment to a revenue stream to pay for it.

“We know from across the water the consequences of making long-term financial commitments and not funding them, and we can’t repeat that mistake,” he said, in reference to recent turmoil over the UK government’s spending plans.

Taoiseach Micheál Martin defended the levy in the Dáil as Independent TD Thomas Pringle claimed it would “shift the blame” for the housing crisis from the Government and “light-touch regulation” on to homeowners. The Fianna Fáil leader rejected a call from Mr Pringle for a levy to pay for structural defects to be imposed on the profits of banks and construction companies.

“No matter how you apply any levy — what you say about profits, nothing stops that from ending up on the very people you are saying would suffer,” he said as he confirmed the Finance Bill would be published on Thursday and debated in the Dáil next week.

Independent Kerry TD Michael Healy-Rae said the Government should “scrap its concrete tax proposal and not just fiddle with it in the Finance Bill” as this would give certainty to people who want to build homes.