Windfall levy failed to raise any funds

Levy of 80 per cent applied to gains on sale or development of land the value of which was attributed to planning decisions

The tax failed to yield a single cent for the Exchequer in the five years since its introduction.

The tax failed to yield a single cent for the Exchequer in the five years since its introduction.

 

A tax scrapped by Minister for Finance Michael Noonan in the budget has proven to be the most unsuccessful in living memory after failing to yield a single cent for the Exchequer in the five years since its introduction.

The fruitless tax in question is an ultra-high 80 per cent windfall levy applying to gains on the sale or development of land the value of which is attributed to planning decisions.

Mr Noonan made a virtue of its elimination in his Dáil speech on Tuesday, saying a 33 per cent capital gains tax would henceforth apply to the property market “as it does to other normal functioning capital asset markets”.

The total yield on the original tax was zero, prompting the decision to scrap the tax altogether from January. It is believed officials in the Department of Finance are at a loss to recall any previous tax which failed to return any money at all to the Revenue.

While it is long-established that no tax could be said to be popular, a tax which is so ineffective as to yield nothing at all is in a different order of unpopularity.

The windfall tax was introduced in 2009 by Mr Noonan’s predecessor, the late Brian Lenihan.

It was brought forward by way of an amendment to the Bill which established Nama, the State’s bad bank. The objective was to ensure windfall gains on rezoned land were subject to capital gains tax at an extraordinary rate of 80 per cent.

The amendment slipped through in the Seanad virtually unnoticed. When picked up eventually by property industry figures, there were warnings that the measure would undermine the value of land eligible for rezoning in the future.