Minister for Finance Paschal Donohoe has confirmed he is to halve the concrete levy from 10 per cent to 5 per cent after “many” Cabinet colleagues raised issues with it.
The change comes after Government TDs and representatives of the construction sector raised concerns that it would add to the cost of construction amid a housing crisis.
The introduction of the levy will be delayed from April to September 1st, and it is expected to raise €32 million over 12 months, under half the €80 million it was originally expected to raise.
A levy on 18 concrete products and on pouring concrete was announced as part of Budget 2023 to fund a redress scheme for people living in homes built with defective building materials.
The levy has been limited to concrete blocks and pouring concrete only, and will no longer apply to pre-cast concrete materials.
“I accept issues that have been raised regarding the potential for that levy to undermine very valuable exports in particular, upon which a number of Irish companies and a number of Irish jobs could be dependent on,” Mr Donohoe said.
“I listened to [Minister for Housing Darragh O’Brien] but I also listened to other colleagues in Cabinet, many of whom did raise issues with me in relation to it, and all of them were listened to, including Darragh.”
Asked about the Government’s ability to make difficult decisions, Mr Donohoe emphasised that the levy was still going ahead.
“I think the credibility of the Government overall in relation to this Budget, and in relation to our ability to make difficult decisions, is absolutely intact.
“If you look at the scale of the change that we are making here, it is a change in terms of the rate, the loss of revenue, which is €30 million out of €87 billion of tax revenue for next year.”
Defective building blocks containing excessive deposits of the minerals mica and pyrite have caused thousands of properties to crack and crumble across the country.
The Government’s Defective Concrete Blocks scheme, estimated to cost €2.75 billion, offers grants of up to €420,000 per dwelling to repair or rebuild them.
Homes in counties Clare, Donegal, Limerick and Mayo are covered under the scheme.
Mr Donohoe said there would be no sunset clause for the levy, as he believed it would be in place for longer than originally planned to fund the redress scheme.
“I think it is important that this measure does not have a sunset clause so that we can keep it in place for as long as is deemed necessary to recoup back a good share of the additional money that is needed to help homes be rebuilt due to mica.”
After Budget 2023, opposition politicians criticised the structure of the concrete levy, saying it threatened to increase the cost of building houses amid a shortage of supply.
Think tank the Economic and Social Research Institute said of the original concrete levy: “Given robust demand for housing combined with long-standing supply constraints, the burden of this new levy is likely to fall on the residents of newly built homes rather than on industry.”
The Society of Chartered Surveyors Ireland estimated the 10 per cent levy would add approximately €3,000 to €4,000 to the cost of building a three-bedroom semi-detached house.
Mr Donohoe said that the revised levy could increase the cost of construction of a three-bedroom house by between 0.2 per cent and 0.35 per cent, and between 0.15 per cent and 0.2 per cent for an apartment.
He added that he was confident of these figures and would publish the analysis underpinning them in the coming days.
The Finance Bill, which is the legislative underpinning the concrete levy and other budgetary measures, will be published on Thursday.
Mr Donohoe also announced that the rental tax credit of €500 would be extended to parents of third-level students if they are paying their rent and the tenancy is registered with the Residential Tenancies Board.
Asked what additional cost this would result in, Mr Donohoe said it would be “broadly consistent with the figures that we have in our Budget”.