Annual €500 rent tax credit may be boosted in coming years, Taoiseach tells FF meeting

Taoiseach Micheál Martin hinted that the annual €500 rent tax credit introduced in the Budget will be boosted in future years.

He told Wednesday night’s Fianna Fáil parliamentary party meeting that his party has “delivered the renters tax credit which is now embedded and we have a platform to build on it from next year”.

Earlier in the day, the Taoiseach claimed Sinn Féin’s figures on housing rent tax credits did not add up as the party’s leader Mary Lou McDonald warned of a “real risk” that the Government’s credits will fuel hikes in rents.

They clashed in the Dáil where leaders’ questions was dominated by Budget 2023 and its impact. Ms McDonald said the €500 tax credit is non-refundable.

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But Mr Martin said Sinn Fein had only allocated €300 million for a €1,500 rent tax credit, while the Government had set aside €400 million for €1,000 in credits for this and next year.

During question time Labour leader Ivana Bacik claimed the Budget’s provisions were spread so thin that a mini-budget would be required early next year. She said that someone earning €100,000 would benefit by €831 while someone on €25,000 to €350,000 would only gain by €191.

And Regional Independent TD Sean Canney criticised as ill-timed and ill-judged the 10 per cent levy on concrete products.

Raising the €500 rental tax credit Ms McDonald said that because it was non-refundable “those without a taxable income are left out….You’ve left out students, and you’ve left out low income workers and incredibly you’ve done all of this without introducing a ban on rent increases.”

She claimed that without a rent freeze the credits will be wiped out through hikes in rental charges.

[ Taoiseach rejects Opposition claims that Budget 2023 is for ‘wealthy people’ ]

Ms McDonald pointed out that the Taoiseach had said the same thing when she highlighted the issue previously. She asked what had changed since then when the Government was not introducing a freeze on rent increases. Her party wanted a tax credit that would result in tenants getting back a month’s rent, along with a ban on rent rises for three years.

But instead the Government has “left the door open for more rent hikes, more exploitation and more hardship”, she said. “Taoiseach you’ve messed this up” and a “crisis has morphed into a disaster”.

But staunchly defending the budget as progressive and balanced and highlighting supportive comments from Fiscal Advisory Council and the ESRI, Mr Martin hit out at Sinn Féin and claimed their figures on rents did not add up.

He said the Government estimated the cost of the €500 annual credit for this year and next at €400 million but said that Sinn Féin’s alternative budget only allowed €300 million for its proposed €1,500 tax credit.

He said the Budget had to be looked at in its entirety. “You mention students. They will have €1,000 knocked off fees this academic year and those on Susi (student grant system) will have a double payment this year.”

He added that for many renters the income tax reductions “will be a very significant support”. He told the Sinn Fein leader for them “you can’t take one item out of the budget and ignore all the rest”.

Mr Martin told Mr Canney that sustainable future revenue stream will be needed to meet the up to €6 billion cost of dealing with mica, pyrite apartment defects and other housing construction problem. Defending the 10 per cent levy on concrete products Mr Martin told Mr Canney that the construction sector has to realise that because of what happened the levies are “to deal with rogue behaviour”.

The levy is expected to raise €80 million annually when it is introduced from April next year. But Mr Canney said there was a “thriving inflation” in the construction sector which was creating havoc for those trying to build homes and local authorities trying to build social houses.

“This levy is not penalising people who committed wrong. It is putting an additional cost on people who are trying to build their own homes.”

Mr Canney said however the only way to avoid rogue behaviour in the construction industry was to implement effective building control and without this billions would continue to be needed for effective building control.

Mr Martin said that remediating houses affected by mica in blocks would cost €2.8 billion and pyrite interventions would cost some €1.5 billion. He added that up to 100,000 apartments would potentially be affected with a cost of up to €6 billion.

He told Ms Bacik, who criticised the budget as being spread too thin, that it was progressive, sustainable and benefit the financially vulnerable.

‘Fair and progressive’

Meanwhile, Wednesday evening’s Fianna Fáil private parliamentary party meeting, said to be the “most positive in years” heard much praise of the budget. Mr Martin told TDs and Senators it was “fair and progressive focusing on those most in need”.

He said ESRI modelling shows it is “focusing on those most in need”.

Mr Martin outlined how income tax reductions will “give low and middle income earners a break” and he described the free school books initiative for primary pupils as “a groundbreaking intervention in education”.

He also hit out at Sinn Féin arguing that its policy proposals are “completely uncosted” and lack substance.

Mr Martin accused the rival party of having limitless spending plans including the capping of energy bills which combined would “undermine the financial stability of our country”.