Taxation and development land


Sir, – I note that the Construction Industry Federation (CIF) has called for a “loan scheme to help first-time buyers” (Business, January 17th). That is, to enable first-time buyers to pay higher prices for new houses. This is a nonsensical proposal which if acceded to will only serve the short-term interests of some CIF members.

Much more interesting is the issue of taxation in relation to development land. A vacant-site levy was proposed as far back as 2016 and finally came into effect at the beginning of 2018. The concept had the backing of the ESRI, not to mention a number of notable names in the economics world. I doubt, however, that any of the promoters of the idea had in mind anything as ineffective as what became law. Supporters of the levy saw it as a means to make life a little less comfortable for land-hoarders who have enjoyed significant capital gains over an extended period in addition to the benefits of the capital gains tax exemption Act introduced in 2012. A serious levy, tax, or charge, call it what you will, was likely to act as an incentive to encourage land hoarders to dispose of their land holdings, hopefully to builders who would wish to develop. An increase in the supply of development land to the market would logically result in lower land values, thereby facilitating the possibility of cheaper houses. The general consensus is that the measure has been a failure to date. The levy at 3 per cent of market value was too low. Even at 7 per cent from 2019 onwards it may still be too low given the level of appreciation in the value of development land. There is evidence of a level of indifference on the part of some local authorities to preparing a list of land holdings for levy purposes. The amount of actual money levied to date has been paltry.

It almost seems that the levy was introduced to fail. Fresh thinking is required here. Why for example is it referred to as a levy? It is a tax and collection should be in the hands of our very efficient Revenue Commissioners. – Yours, etc,



Dublin 6.