Wednesday, 20 January 2021

Questions (153)

Denise Mitchell

Question:

153. Deputy Denise Mitchell asked the Minister for Finance the estimated cost of increasing the funding allocated to the living cities initiative annually by 50%. [2646/21]

View answer

Written answers (Question to Finance)

The Living City Initiative (LCI) was provided for in Finance Act 2013 and commenced on 5th May 2015. In my Budget 2020 speech, I announced that the LCI would be extended from 5 May 2020 to 31 December 2022. LCI is designed as a tax-based scheme which is demand led. As such, it is not subject to an annual cost ceiling and the question of increasing its funding annually by 50% does not arise.

LCI is specifically aimed at the regeneration of the historic inner cities of Dublin, Cork, Galway, Kilkenny, Limerick and Waterford. The scheme provides income or corporation tax relief for qualifying expenditure incurred in refurbishing/converting qualifying buildings which are located within pre-determined 'Special Regeneration Areas' (SRAs).

There are three types of relief available:

- Owner-occupier residential relief;

- Rented residential relief; and

- Commercial/Retail relief.

In 2016 officials from my Department reviewed the measure in consultation with the relevant councils and the then Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs. On foot of that review, a number of changes were brought forward in Budget 2017 in order to make the initiative more attractive and effective.

The principal change extended the residential element of the scheme to landlords, who may now claim the relief by way of accelerated capital allowances for the conversion and refurbishment of property, which was built prior to 1915, where such property is to be used for residential purposes. In addition, the requirement for a pre-1915 building to have been originally constructed for use as a dwelling in order to qualify for the residential element of the Initiative has been removed. The floor area restriction for owner-occupiers has also been removed, while the minimum amount of capital expenditure required for eligibility for relief, under all elements of the scheme, has also been amended and must now only exceed €5,000.

The aim of the above changes is to improve the effectiveness of the scheme. Once it is clear that this have been achieved, it will then be possible to consider if and how the initiative might be extended further, for example to other locations. Unless the underpinning scheme is made more effective, extension of eligibility for it to other locations is likely to be largely ineffective.

I am advised by Revenue that the available information in respect of the cost of the Living City Initiative is published on the Revenue website at link;

https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/property-reliefs.aspx

for all years up to 2018. The relevant row in the table is titled ‘Living City’. The following table outlines the cost/uptake for all 3 elements combined of the scheme nationally between 2013 and 2018 (the most recent year for which data are available).

Year

No. of claimants

Max Tax Cost (€M)*

Amount claimed (€M)

2018

27

0.2

0.5

2017

20

0.1

0.4

2016

15

0.2

0.5

2015

13

0.2

0.5

2014

N/A

0.1

0.2

2013

N/A

0.05

0.1

*assumed at 40% for IT and 12.5% for CT.