Peadar Tóibín
Ceist:26. Deputy Peadar Tóibín asked the Minister for Finance if his Department has undertaken any study on the fluctuation in the price of petrol and diesel in each of the past ten years. [15071/24]
Amharc ar fhreagraFuel Prices
Ceisteanna (26)
Freagraí scríofa
The price of diesel and petrol are an important cost for households and businesses in the Irish economy. In this context, my Department monitors and analyses these price dynamics closely on an ongoing basis.
From exceptionally low levels during the pandemic, wholesale oil prices rose steadily as Covid-19 restrictions eased. Following Russia’s invasion of Ukraine in February 2022, wholesale oil prices surged, eventually peaking at $117 dollars a barrel in June 2022. Since then wholesale prices have declined significantly to roughly $85 dollars a barrel, albeit remaining well above the 2019 average of $64 dollars a barrel.
Retail diesel and petrol prices (inclusive of tax) in Ireland have moved close to one-for-one with wholesale oil prices, with petrol and diesel prices peaking at the same time as wholesale markets - at values of €2.17 and €2.15 per litre respectively. Following a similar trajectory to wholesale oil markets, as of the 3rd of April petrol and diesel stand at €1.74 and €1.73 per litre respectively.
Excise duties were reduced in March 2022 in order to mitigate the impact of the sharp rise in wholesale oil prices on the petrol and diesel prices facing consumers. Given the significant easing in the wholesale energy markets since their 2022 peak, excise duties were partially restored on the 1st of April and another restoration will take place on the 1st of August.
Business Supports
Ceisteanna (27)
James O'Connor
Ceist:27. Deputy James O'Connor asked the Minister for Finance if he has plans for a range of supports to help the hospitality industry, including VAT reductions, to help businesses in difficulties and incentivise customers to support local outlets; and if he will make a statement on the matter. [15243/24]
Amharc ar fhreagraFreagraí scríofa
As the Deputy will be aware, the 9 per cent VAT rate applied on a temporary basis to the hospitality and tourism sectors until 31 August 2023 when it reverted to the 13.5 per cent rate. The 9 per cent rate was introduced on 1 November 2020 in recognition of the fact that the tourism and hospitality sectors were among those most impacted by the public health restrictions put in place throughout the pandemic.
The economic rationale for a VAT rate reduction at that time as it was in 2011 when it was also reduced to 9 per cent was to lower consumer prices, encouraging higher demand, more output and an increase in employment.
Despite facing numerous successive headwinds over recent years, the domestic economy has proven to be remarkably resilient. Looking ahead, as inflation eases, the real disposable income of households should recover and support consumer spending. As a result, households are on a stronger financial footing and this will support demand for contact-intensive services including the tourism and hospitality sectors.
In relation to employment, between the end of 2020 when the 9 per cent rate was re-introduced, and the third quarter of 2023, total economy-wide employment expanded from 2.3 million to reach a record high of 2.66 million, an increase of 17 per cent. The Q3 2023 Labour Force Survey indicated that employment in the accommodation and food service sector stood at 181,000.
It is noteworthy that 14 EU countries have a VAT rate of 12 per cent or higher on food services. Our nearest neighbour is Great Britain and Northern Ireland which has a VAT rate of 20 per cent on food services.
It is important to remember that VAT reductions, even temporary VAT reductions, have a cost to the Exchequer. The estimated cost of the 9 per cent VAT rate for tourism and hospitality, from 1 November 2020 to 31 August 2023, was €1.2 billion. This represented a very substantial support by the Government to the hospitality and tourism related sectors.
The cost of a further temporary VAT reduction to 9 per cent for a full year is estimated to be €764 million. Even where the measure is restricted to food and catering services, the estimated full year cost is €545 million.
The Government wants to maintain a healthy and profitable environment for these sectors going forward. However, in making any decision in relation to VAT rates or other taxation measures, the Government must balance the costs of the measures in question against their impact and the overall budgetary framework.
The Deputy will also be aware that, on 5 February, I announced changes to the tax debt warehousing scheme including a reduction in the interest rate on warehoused debt to 0 per cent which, amongst other sectors, will assist businesses in the tourism and hospitality sectors.
The Government has provided significant support to business throughout the period of increasing costs and Budget 2024 contained a number of measures which will support businesses facing increased costs, including the Increased Cost of Business (ICOB) grant, which aims to provide financial support to small and medium sized businesses who operate from a rateable premises, at a cost of €257 million. The grant will be at a rate of half an enterprise’s commercial rates bill, for 2023, for firms paying up to €10,000 in rates. A flat €5,000 grant will be available to firms who pay between €10,000 and €30,000 in rates. The online application system for the grant is now open with applications accepted until 1 May 2024.
Broader supports for SMEs which were announced in Budget 2024 include the extension of the 9% VAT rate on gas and electricity from end-October 2023 to end-October 2024.
In light of these points I have no plans to reduce the VAT rate for the tourism and hospitality sector.
Tax Code
Ceisteanna (28, 30)
Pearse Doherty
Ceist:28. Deputy Pearse Doherty asked the Minister for Finance if he or his Department are considering increasing the rate of and threshold for the 10% stamp duty with respect to the bulk purchase of residential property; and if he will make a statement on the matter. [15235/24]
Amharc ar fhreagra
Denise Mitchell
Ceist:30. Deputy Denise Mitchell asked the Minister for Finance if he or his Department are considering increasing the rate of and threshold for the 10% stamp duty with respect to the bulk purchase of residential property; and if he will make a statement on the matter. [15242/24]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 28 and 30 together.
As I set out in my response to an earlier question from the Deputy on this subject, the Government is acutely aware that the bulk purchase of homes deeply affects aspiring owner-occupiers and first time buyers, and has introduced numerous measures to address this. This has been addressed both through disincentivising bulk purchases, and through positive steps taken to increase the housing supply.
Revenue and CSO data show that the higher stamp duty rate has applied to less than 1% of residential property transactions between May 2021 to end-2023, and has applied to less than 2% of total new dwellings completed since 20 May 2021. Revenue data also demonstrates a yield of approximately €40 million has been collected in this category from 2021 to 2023.
As the Deputy is aware, Section 28 Guidelines were introduced by the Minister for Housing, Local Government and Heritage in 2021, which aim to provide an ‘owner-occupier’ guarantee by ensuring that new ‘own-door’ houses and duplex units in housing developments can no longer be bulk-purchased by institutional investors in a manner that causes the displacement of individual purchasers or social and affordable housing, including cost-rental. The most recent data indicates that from the introduction of these guidelines to December 2023, 40,827 homes were granted planning permission with conditions prohibiting the bulk purchase by, or multiple sale to, a single purchase.
The Government has also responded to challenges in the housing market through Housing for All, which is the Government’s plan to boost the supply of housing to 2030, to increase availability and affordability of housing, and to create a sustainable housing system into the future. The Government continued to fulfil this commitment through Budget 2024, which brought forward a record €5.1 billion budget for capital investment in housing. This includes €2.6 billion in exchequer funding, €978 million in Land Development Agency (LDA) funding, and €1.5 billion in Housing Finance Agency (HFA) funding.
The Government has consistently committed to putting affordability at the heart of the housing system through multi-annual funding through Housing for All. The latest CSO data on planning permissions shows that nationally, 41,225 dwelling units were granted planning permission in 2023, an increase of approximately 21% per cent from 2022. 11,181 residential planning permissions were granted for Q4 2023, an increase of 47% per cent compared to the Q4 2022 period.
Through the plan’s record investment by the State in social and affordable housing, supports for people to buy or rent affordable homes, as well as reforms of rental protections, planning, land management and other areas, we are addressing the challenges people are facing in accessing affordable housing.
Given the above mentioned measures the Government has taken against bulk purchasing of residential property, and taking into consideration the positive results seen through Housing for All, I do not have immediate plans to increase the rate and reduce the threshold at which the higher stamp duty rate on certain purchases of residential property applies. However, as with all areas of tax policy, stamp duty on bulk purchases of residential property will be kept under review throughout the annual budgetary process.
Tax Yield
Ceisteanna (29, 37)
Peadar Tóibín
Ceist:29. Deputy Peadar Tóibín asked the Minister for Finance the amount taken in corporation tax in each of the past 18 months, in tabular form. [15072/24]
Amharc ar fhreagra
Cormac Devlin
Ceist:37. Deputy Cormac Devlin asked the Minister for Finance for an overview of tax receipts to date in 2024; and if he will make a statement on the matter. [14270/24]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 29 and 37 together.
Overall, tax revenues in the first three months of the year were a continuation of what we saw over the second half of last year: steady growth in our income tax and VAT receipts but with notable volatility in corporation tax.
Tax revenues of €20.1 billion were collected in the first of the quarter of the year, €0.3 billion or 1.8 per cent ahead of the same period last year, with growth in income tax and VAT compensating for a decline in corporation tax.
Aside from the decline in corporate tax – which is likely due to a technical timing issue – we are, broadly speaking, where we expected to be on tax revenue in the first three months of the year.
Income tax receipts in the period stood at €7.9 billion, up by €0.6 billion or 7½ per cent on the same period last year: this is a clear indicator of the resilience in our labour market.
VAT receipts of €7.1 billion were ahead of the first quarter in 2023 by €0.4 billion, or 5.4 per cent.
Corporation tax receipts recorded in the first quarter of the year stood at €2.4 billion. This was down by €0.8 billion, or 24.8 per cent, on the same period last year. Indications suggest that this may reflect a timing issue, so we expect that there may be a corresponding increase later in the year that will compensate for this decline.
This means that while corporation tax receipts are now significantly behind profile, they are expected to recover over the course of the year.
Nonetheless, the volatility in corporation tax receipts reminds us of the inherent unpredictability in what has become a highly concentrated revenue stream. It has been a key priority for this Government that we do not build permanent spending commitments on the basis of revenues that could be transient. That is why we have decided to establish the two new long-term investment funds, the legislation in respect of which was published recently.
The below table contains corporation tax payments for the previous eighteen months.
|
€m |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
|
2024 |
57 |
527 |
1,851 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
2023 |
50 |
596 |
2,592 |
308 |
2,730 |
4,272 |
333 |
1,780 |
1,782 |
1,280 |
6,309 |
1,805 |
|
2022 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
2,327 |
4,977 |
1,507 |
Question No. 30 answered with Question No. 28.
Question No. 31 answered with Question No. 6.
General Government Debt
Ceisteanna (32)
Seán Haughey
Ceist:32. Deputy Seán Haughey asked the Minister for Finance if he will report on his Department's latest assessment of public indebtedness in Ireland. [14266/24]
Amharc ar fhreagraFreagraí scríofa
The Department’s latest assessment of public indebtedness in Ireland is set out in the Annual Report on Public Debt in Ireland for 2023, published in February.
As highlighted in this report, gross public debt fell to an estimated 76 per cent of GNI* at end-2023, a significant reduction from its peak of 166 per cent of GNI* in 2012. The stock of public debt fell from €236 billion at end-2021 to €223 billion at end-2023 but remains nearly €20 billion higher than pre-pandemic levels. Additionally, the Budget 2024 forecasts envisage a modest reduction of the level of public debt by the end of 2026.
The key message from the report is that the level of indebtedness remains high, despite the downward trajectory of the debt-income ratio. Indeed, at just over €42,000 per person, Ireland has one of the highest debt per capita burdens in the world.
An important consideration when assessing the sustainability of public debt is the underlying structure of the debt and the State’s ability to make interest payments. Structural aspects of Ireland’s debt stock have, so far, helped to insulate the public finances from the higher interest rate environment with the vast majority of debt locked-in at fixed rates and with a relative long average maturity profile. However, the need to re-finance maturing debt over the medium-term will likely result in higher borrowing costs. Additionally, the public finances remain vulnerable to a shock to corporation tax receipts or to the multinational sector in Ireland generally.
Moreover, looking ahead, structural economic changes such as the so-called “4Ds” (shifting demographics, decarbonisation, digitalisation and de-globalisation) pose significant challenges for the public finances.
This underlines the need for prudent management of debt and the re-building of fiscal buffers. The landmark Future Ireland Fund and Infrastructure, Climate and Nature Fund Bill 2024 was published on April 4. This bill will establish these two longer-term savings vehicles which are a key part of the Government’s fiscal risk management strategy. The accumulation of financial assets overtime will help alleviate some of the future costs of structural change in the economy.
Business Supports
Ceisteanna (33)
Matt Shanahan
Ceist:33. Deputy Matt Shanahan asked the Minister for Finance the changes that are being considered to the debt warehousing scheme to support private businesses availing of the scheme; and if he will make a statement on the matter. [5746/24]
Amharc ar fhreagraFreagraí scríofa
The Tax Debt Warehousing scheme has provided vital and practical liquidity support to businesses by assisting them with their cash-flow during difficult trading periods. The Scheme allowed businesses to temporarily defer VAT and Employer PAYE, certain self-assessed income tax liabilities, and Temporary Wage Subsidy Scheme and Employment Wage Subsidy Scheme overpayments on an interest-free basis for an extended period of time until end-December 2022, or end-April 2023 for those in the extended scheme.
After that interest-free period, a reduced interest rate of 3 per cent was to be applied until either the warehoused debt was paid or the business otherwise exited the scheme. However, on 5 February 2024, I announced that this interest rate has been reduced to 0 per cent.
Revenue has confirmed that it has started the process of refunding any taxpayers who have already paid the 3 per cent interest rate in respect of warehoused debt and have contacted customers who have entered a Phased Payment Agreement (PPA) to adjust the terms of their PPA to take account of the 0 per cent interest.
At end-March 2024, €1.65 billion of warehoused debt was owed by 55,490 individual entities, with 70 per cent of those customers having outstanding liabilities of less than €5,000. Revenue has issued letters to taxpayers with warehoused debt to outline their payment options, with further outreach and communications campaigns planned.
Businesses availing of the scheme are required to engage with Revenue by 1 May 2024 to make arrangements to pay the debt over an agreed period of time, based on their individual circumstances.
Revenue has advised that their approach will be flexible in relation to payment plans on warehoused debt, having regard to the financial circumstances of each case and the customer's capacity to pay. These flexibilities include the possibility to extend the duration of payment arrangements beyond the typical three to five-year duration. In addition, Revenue has confirmed that an initial down payment may not always be required upon commencing a payment arrangement.
It remains a key condition of the scheme that businesses continue to file their current tax returns and pay current liabilities as they fall due. By doing so, businesses will benefit from the 0 per cent interest rate and flexible payment options available in respect of warehoused debt.
Question No. 34 answered with Question No. 19.
Tax Yield
Ceisteanna (35)
Brendan Griffin
Ceist:35. Deputy Brendan Griffin asked the Minister for Finance the total tax take from the restaurant sector in 2023, broken down by category; how this figure compares with the estimated amount of total tax take from the restaurant sector as set out in Budget 2023 in October 2022; the total estimated tax take from the restaurant sector for 2024, with a breakdown of each category; how much additional tax the increased VAT rate of 13.5% for the entire year is estimated to generate by year end; if he is concerned with the closure of restaurants nationwide; if estimated tax take figures need to be revised as a result; if he is reconsidering the reintroduction of the 9% VAT rate; and if he will make a statement on the matter. [15214/24]
Amharc ar fhreagraFreagraí scríofa
I am advised by Revenue that net tax receipts by sector to year 2022 are available on the Revenue website www.revenue.ie/en/corporate/documents/statistics/receipts/net-receipts-by-sector.pdf. These tax receipts are presented according to the taxpayers’ primary economic activity classification (NACE). It should be noted that the sectoral breakdown cannot be taken as the exact tax amount associated with this economic activity as a number of traders (including VAT Group remitters) will operate across multiple economic sectors.
Data for year 2023 are expected to be available at the same link by the end of May 2024, following the completion of the annual audit of Revenue accounts by the Comptroller and Auditor General and the presentation of the accounts to the Oireachtas.
Provisional figures for 2023 are provided in the table below.
|
Restaurants and Food Services (NACE code 56) |
VAT Internal |
PAYE, Income Tax and USC |
Self Employed Income Tax |
Corporation Tax |
Capital Gains Tax |
Overall |
|
2023 |
€318m |
€158m |
€25m |
€38m |
€2m |
€541m |
Source: Revenue Net Receipts
VAT traders are not required to identify the VAT yield generated from the supply of specific goods and services on their VAT returns. As noted above, VAT traders may operate across multiple economic sectors and the NACE code may not fully identify VAT associated with the restaurant sector. A tentative estimate, based on third party data, of the VAT generated in 2023 and the expected yield in 2024 from expenditure on meals out (for example restaurants, takeaways and canteens) are approximately €1,162m and €1,633m respectively. The 2024 figure includes an additional €544m from the reintroduction of the 13.5% VAT rate and incorporates inflationary growth within this sector.
For the Accommodation and Food Services sector as a whole, the estimated VAT yield is estimated at €1,510m and €2,112m for 2023 and 2024 respectively, with the 2024 estimate including an additional €728m from the reintroduction of the 13.5% VAT rate.
As the Deputy will be aware, the 9 per cent VAT rate applied on a temporary basis to the hospitality and tourism sectors until 31 August 2023 when it reverted to the 13.5 per cent rate. The 9 per cent rate was introduced on 1 November 2020 in recognition of the fact that the tourism and hospitality sectors were among those most impacted by the public health restrictions put in place throughout the pandemic.
The economic rationale for a VAT rate reduction at that time as it was in 2011 when it was also reduced to 9 per cent was to lower consumer prices, encouraging higher demand, more output and an increase in employment.
Despite facing numerous successive headwinds over recent years, the domestic economy has proven to be remarkably resilient. Looking ahead, as inflation eases, the real disposable income of households should recover and support consumer spending. As a result, households are on a stronger financial footing and this will support demand for contact-intensive services including the tourism and hospitality sectors.
In relation to employment, between the end of 2020 when the 9 per cent rate was re-introduced, and the third quarter of 2023, total economy-wide employment expanded from 2.3 million to reach a record high of 2.66 million, an increase of 17 per cent. The Q3 2023 Labour Force Survey indicated that employment in the accommodation and food service sector stood at 181,000.
It is noteworthy that 14 EU countries have a VAT rate of 12 per cent or higher on food services. Our nearest neighbour, Great Britain and Northern Ireland has a VAT rate of 20 per cent on food services.
It is important to remember that VAT reductions, even temporary VAT reductions, have a cost to the Exchequer. The estimated cost of the 9 per cent VAT rate for tourism and hospitality, from 1 November 2020 to 31 August 2023, was €1.2 billion. This represented a very substantial support by the Government to the hospitality and tourism related sectors.
The cost of a further temporary VAT reduction to 9 per cent for a full year is estimated to be €728 million. Even where the measure is restricted to food and catering services, the estimated full year cost is €544 million.
The Government wants to maintain a healthy and profitable environment for these sectors going forward. However, in making any decision in relation to VAT rates or other taxation measures, the Government must balance the costs of the measures in question against their impact and the overall budgetary framework.
The Deputy will also be aware that, on 5 February, I announced changes to the tax debt warehousing scheme including a reduction in the interest rate on warehoused debt to 0 per cent which, amongst other sectors, will assist businesses in the tourism and hospitality sectors.
The Government has provided significant support to business throughout the period of increasing costs and Budget 2024 contained a number of measures which will support businesses facing increased costs, including the Increased Cost of Business (ICOB) grant, which aims to provide financial support to small and medium sized businesses who operate from a rateable premises, at a cost of €257 million. The grant will be at a rate of half an enterprise’s commercial rates bill, for 2023, for firms paying up to €10,000 in rates. A flat €5,000 grant will be available to firms who pay between €10,000 and €30,000 in rates. The online application system for the grant is now open with applications accepted until 1 May 2024.
Broader supports for SMEs which were announced in Budget 2024 include the extension of the 9% VAT rate on gas and electricity from end-October 2023 to end-October 2024.
In light of these points I have no plans to reduce the VAT rate for the tourism and hospitality sector.
Tax Code
Ceisteanna (36)
Ged Nash
Ceist:36. Deputy Ged Nash asked the Minister for Finance if he will commit to a review in 2024 of the remittance basis of tax and the domicile levy; and if he will make a statement on the matter. [15014/24]
Amharc ar fhreagraFreagraí scríofa
The Domicile Levy was introduced in the Finance Act 2010 to ensure that Irish-domiciled individuals who meet certain criteria make a contribution to the exchequer, irrespective of where they are resident for tax purposes. The purpose of the levy is to ensure that individuals with substantial income and assets located in the State make some sort of contribution to the exchequer.
The Remittance Basis of Taxation (RBT) concerns how non-domiciled Irish residents are taxed on their worldwide income.
The Commission on Taxation and Welfare (COTW) considered the remittance basis of taxation in its report entitled ‘Foundations for the Future’ which was published on 14 September 2022. As a matter of taxpayer equity, the Commission recommended that the remittance basis should only be available to resident, but non-domiciled taxpayers, for a maximum period of three years.
In due course my Department will examine all recommendations from the Commission on Taxation and Welfare’s report including the particular recommendations on the remittance basis of taxation.
As with all areas of tax policy, both the Remittance Basis of Taxation and the Domicile levy are keep under review on an ongoing basis.
It should also be noted that ongoing compliance activity is carried out in this area by the Revenue Commissioners.
Question No. 37 answered with Question No. 29.
Flexible Work Practices
Ceisteanna (38)
Ruairí Ó Murchú
Ceist:38. Deputy Ruairí Ó Murchú asked the Minister for Finance if he will provide an update on the survey that was carried out related to cross Border workers and the issues they face in relation to working from home, income tax and social protection; if his Department has had any recent engagement with the Assembly or the British Government on this issue; and if he will make a statement on the matter. [15157/24]
Amharc ar fhreagraFreagraí scríofa
As the Deputy will be aware, the issue of cross border workers and the availability of remote working options has potential tax implications not only for this country but also on an international level. It is a very complex matter on which the State cannot move unilaterally. Discussions in relation to global mobility and the tax policy implications for cross border workers are ongoing at both the EU and the OECD. My Department is fully engaging with all the relevant stakeholders and is contributing to the policy discussions on the issue.
To support work in this area, the following three issues are actively being pursued:
• Obtain Better Data – there is a general acceptance that data in relation to the nature and extent of cross-border working could be improved. The ESRI has been commissioned to undertake a research project in this area. This work has been ongoing over the last year and officials in my Department are engaging with the ESRI with a view to obtaining the final report. It is envisaged that the report will be completed in the short-term.
• Minimise Administrative Burden – Revenue has looked at ways to minimise and simplify the administrative burden insofar as possible. Revenue has published guidance in this regard which will be of assistance to employers and employees; it can be viewed at the following link: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-42/42-04-01.pdf
• International Discussions – my Department is actively engaging in any international discussions on the policy implications of cross-border working. The Department will also engage bilaterally with other jurisdictions as appropriate to the circumstances. In this regard, over the course of 2022 officials from my Department had two meetings to facilitate an exchange of information on the issue of cross-border working with representatives of HM Treasury.
Issues relating to social protection are a matter for the Minister for Social Protection and that Department.
Question No. 39 answered with Question No. 23.
Question No. 40 answered with Question No. 9.
Question No. 41 answered with Question No. 24.
Housing Schemes
Ceisteanna (42)
Catherine Connolly
Ceist:42. Deputy Catherine Connolly asked the Minister for Finance further to Parliamentary Question No. 110 of 1 February 2024, his plans for the phasing out of the help-to-buy scheme; and if he will make a statement on the matter. [14379/24]
Amharc ar fhreagraFreagraí scríofa
The Help to Buy Scheme was introduced in 2017 with the purpose of assisting first-time buyers with the deposit required to purchase or self-build a new house or apartment to live in as their home. The relief is only available in respect of new builds, with a view to increasing the supply of new housing and stimulating demand.
The Help to Buy scheme has been a significant support for first time buyers of new homes. To 29 February 2024, the most recent data available, some 45,180 first-time buyers, either singly or as part of a couple, have benefited from the scheme.
As the Deputy is aware, Finance Act 2023 extended the Help to Buy scheme for a further year to the end of 2025. The scheme was also amended to enhance its interaction with the local authority affordable purchase scheme. This amendment will enable the use of the affordable dwelling contribution received through the affordable purchase scheme for the purposes of calculating the 70% loan to value requirement, thereby facilitating access for a greater number of affordable purchase scheme purchasers to the Help to Buy scheme.
The Deputy has previously raised concerns regarding the potential that the scheme may exacerbate housing prices, and as has previously been stated, policy makers were aware at the time that the scheme was being developed that it was not without risk. Likewise, they were aware that there was a danger that, against a background of constrained supply, the initiative could serve to increase prices for new homes, thus potentially undermining to some extent the affordability aspiration of the scheme. However, on all occasions when the matter was formally examined to date, concerns in this regard were not borne out by the review data.
Studies carried out by Indecon Economic consultants found that the main driver of house prices was the mismatch between supply and demand rather than the existence of the scheme. Similarly, the review by Mazars in 2022, found that there is no definitive evidence that Help-to-Buy pushed up the price of new houses. In fact, Mazars found that the prices paid for new homes by people who received the Help to Buy relief were slightly lower than new house prices in the economy in general, likely because of the €500,000 price eligibility cap.
There have been some significant changes in the market even since the Mazars report on the scheme was published. The increase in interest rates in the intervening period means that further stability and certainty is needed for first time buyers who may now face higher mortgage interest rates. I decided that now is not the time for the withdrawal of supports for those purchasers. The extension of the Help-to-Buy for a further year to 31 December 2025 takes account of the need for certainty in the market pending the increase in new housing supply envisaged by the Government’s Housing for All strategy.
As I indicated on Budget Day, I confirm that the Help to Buy scheme will continue to be examined to see if any additional changes are necessary.