Clearly the dying business of the government is to enact the Finance Bill. The draft bill has rolled back on provisions relating to the termination of property incentives such as Section 23 tax reliefs. Instead, an economic impact assessment will now be undertaken to examine the effect of any changes to present provision, meaning that any tax relief changes will be deferred for several months or longer. I’m not going to deny that there are financial implications for investors in rolling back on Section 23 tax reliefs and other property tax incentives. It will undoubtedly push some investors into difficulties and some over the edge into bankruptcy. However, they and their wealth, is being sheltered and protected on the pretext of saving the banks from further losses – and make no mistake this is protecting long term assets of investors from the perils of what happens when a free market goes sour; and other parts of the economy are subsidizing this tax relief to the tune of €60m a year through further cuts or increased tax elsewhere in the bill and earlier budgetary changes.
The government has been little prepared to listen to and hold back policy changes in relation to the financial penalties being imposed on lower and middle class citizens through tax hikes and cuts in benefits, and those parts of the bill remain. It would appear though that they have listened to their allied lobby groups in the construction, taxation and financial sectors such as the Construction Industry Federation, Irish Property Owners’ Association, Irish Taxation Institute, and Irish Auctioneers and Valuers Institute (see IT article) and to align that with protecting the investor class that has traditionally voted for them. A cynical election ploy of a party fighting for survival? An attempt to push an unpopular decision onto the next government? Or a sensible strategy to help Ireland out of the financial mess it finds itself in? If the latter, why did it even find its way onto the agenda in the first place?
For a party that has been arguing that There Is No Alternative to most things financial for the past couple of years, it seems after all that there is an alternative to investors feeling a slightly larger pinch or facing the realities of the free market in action. If only they were bond holders – they would have been completely indemnified.