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  • Writer's pictureHollywood Developments

Help-to-Buy for first-time home-buyers set to be extended in coming Budget

First introduced in 2014 to drive the construction of houses, the HTB scheme is designed to assist first-time property buyers with the deposit required to buy or build a new house or apartment for them to live in.

Around 30,000 buyers have availed of the grant, at a cost to the taxpayer of approximately €200 million.

However, the scheme is due to expire at the end of this year, and the Government has not yet given a commitment to extending it.

In an answer to a parliamentary question asked by Fianna Fail's Michael McGrath, the Minister for Finance Paschal Donohoe said the full-year cost of continuing the scheme beyond the current sunset-clause would be €50 million.

"The Help to Buy scheme has become a crutch that the property market generally and a large number of first time buyers are increasingly depending on," said Mr McGrath.

"It will be very difficult for government to remove the incentive now, especially at a time when there is already unsold new stock in the market and more and more first time buyers are finding the market unaffordable.

"Given that the cost of the scheme last year was €73.2m and the cost for the five months to the end of May this year was €35.4m, it seems to me the Minister is significantly understating the budgetary impact of the scheme."

The VRT relief, which is worth up to €2,500 on hybrid and plug-in electric hybrid vehicles, is also on the long list of tax expenditure schemes, incentives exemptions and other measures with sunset clauses on them.

It would cost €16 million a year to continue once it has expired. 

The Government has set a target of having one million electric vehicles on the roads here by 2030.

However, it will have to decide whether a continuation of hybrid electric incentives are necessary to bring that change about or whether the money would be better spent on promoting a switch to pure electric.

"While the move to electric vehicles has to be supported, the government needs to help people along as they make that journey," said Mr McGrath.

"Not everyone can make the leap to a full EV overnight. Removing VRT relief for people who buy hybrid and plug in hybrid vehicles at this time would be a retrograde step and would encourage people to continue to drive older and more environmentally damaging vehicles."

"Fianna Fáil will also be looking for the government to reform the VRT system so as to manage the effect of the full move to the new emissions system."

Other measures listed for consideration include the Capital Gains Tax relief for farm restructuring, which would cost €2 million a year to extend beyond its current expiry date of December 31st next.

The Living City Initiative, which ends in May of next year, would cost the taxpayer €3 million to continue.

The current round of the Knowledge Development Box is due to come to an end at the end of next year, and it would cost €49 million per annum if the Government decides to keep it going.

The Stamp Duty Consolidation Relief is also due to end next year and continuing it would cost €600,000 a year.

But while these are revenue costing measures, one revenue-yielding measure is due to cease at the end of 2021.

The Bank Levy provides around €150 million a year and is the subject of a sunset clause on 31st December 2021.

According to the Department of Finance, all the tax schemes, incentives and exemptions that have expiry dates amount to 0.1% or less of the total tax revenue forecast in each budget.

The department says the Summer Economic Statement incorporates the relevant budget costing for the various measures and reliefs.

It says any policy changes impacting such measures will be included in the fiscal calculations at the appropriate time.

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