Finance Bill Shows Property Investors still calling the shots

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While the soap opera of who will captain Fianna Fail’s sinking ship into the election is obsessed over by the media, the publication of the Finance Bill on Friday last has shown that for some at least it’s business as usual. Having announced in his Budget speech that Section 23 property tax reliefs were to be curtailed (not abolished – just curtailed!), Minister for Finance and wannabe FF leader, Brian Lenihan, has changed his mind.

Instead these reliefs – whose only beneficiaries are landlords and property investors – will remain in place pending “an economic impact assessment”. Minister Lenihan came to this decision following lobbying by what he describes as a “wide range of …individuals and groups … regarding the effects of the changes on the real economy...”

This “wide range of … individuals and groups” included the Irish Property Owners Association, the Construction Industry Federation, the Society of Chartered Surveyors, the Irish Auctioneers and Valuers Institute, the Irish Hotels Federation and the Irish Taxation Institute.

Collapse
Section 23 reliefs were one of the contributory factors to the property bubble which ultimately led to the collapse of entire Irish economy. They allow an investor to offset rental income from any Irish property against the purchase price of a designated property, thus reducing considerably his/her tax bill. The Budget proposal was that the relief would only apply to rental income from the Section 23 property itself.

But despite having brought the economy to its knees and landing ordinary taxpayers with a multi-billion euro debt, these ‘property investors’ have no intention of sneaking away with their tails between their legs. Among the “individuals and groups” who were no doubt able to have a quiet word in the Minister’s ear over the past couple of weeks was Tom Parlon, former Progressive Democratic T.D. and party chair, now Director General of the Construction Industry Federation.

No such open ear has been shown to those struggling to survive on minimum wage. Despite the obvious impact of the €1 cut on the “real economy” of a large number of people (over 50,000 according to Friday’s ‘Irish Times’), the government is to proceed with this draconian measure.

The ministerial order to bring the cut (from €8.65 to €7.65 per hour) into effect from 1st February was signed by Minister for Enterprise Batt O’Keefe on Thursday. It was to be one of his last acts as a government minister. About 18 hours later O’Keefe announced his “resignation” from the Cabinet. When the Dáil is dissolved in a couple of weeks time, ex-Minister O’Keefe will receive a TDs pension of over €50,000 per annum. 

A bizarre aside
As an aside, while looking up who the Irish Property Owners Association actually is, I discovered that they are part of the Union Internationale de la Propriété Immobiliere (International Union of Property Owners). Bizarrely the front page of the UIPI website contains a story which states:

“10th December: "WORLD PROPERTY DAY"!
The 10th of December of each year, internationally celebrated as the UN "Human Rights Day", has been declared by UIPI also as World Property Day to remind the world of a basic Human Right, crucial for everybody on this earth, which is usually "forgotten" by the human rights activists worldwide... 

For this reason UIPI organizes at the end of each year, an international event named "World Property Day" in a different country, invited by one of its members.”

Apparently “World Property Day” took place in Dublin on 10th December 2010, hosted by the IPOA. They must have forgotten to invite their tenants and the homeless because I’m sure they’d agree that the “basic Human Right” shouldn’t be denied to anyone. But I’m sure the event gave them plenty of scope to lobby about the injustice of the Section 23 abolition.

Dublin’s Lord Mayor, Gerry Breen of Fine Gael opened their conference declaring that “a strong property sector is crucial to the social fabric of society”. Silly old me – I thought that it was ensuring that everyone had a proper home to live in and a decent standard of living that was a mark of a decent society!  

WORDS: Gregor Kerr

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