Dáil Éireann Debate, Monday - 11 September 2023
445. Deputy Michael Healy-Rae asked the Minister for Finance his views on introducing levies on concrete products (details supplied), which will have a detrimental effect for people and companies; and if he will make a statement on the matter. [37874/23]
View answerAs the Deputy is aware, arising from a November 2021 Government decision that a levy be imposed on the construction sector to contribute towards the cost of the Mica Redress Scheme, the Defective Concrete Products Levy was announced as part of Budget 2023.
The levy, which was legislated for in section 99 of Finance Act 2022, will apply to pouring concrete and concrete blocks as defined by 2 harmonised EU standards. It should be noted that pouring concrete and the most widely used concrete block type are subject to a reduced rate of VAT at 13.5% as opposed to the standard rate of 23%.
As part of the work undertaken on the impact that the levy could have on the construction sector the Department of Housing, Local Government and Heritage commissioned a bottom up scientific analysis, which was carried out by an independent Construction Economics Cost Consultant, to help identify the likely impact of the levy on construction costs.
This report was carried out in September 2022 and took account of the prevailing relevant costs in the construction sector as they applied at the time they were prepared. The costs set out in the report are for the third quarter of 2022 and account for inflation up to that point in time.
This report was undertaken on the impact of the levy, as was announced in the Budget 2023 speech, and so the cost assessment is based on a 10% levy on concrete products for typical dwellings. As the rate of the levy (as was provided for in Finance Act 2022) was subsequently reduced to 5% following consideration of feedback received from industry participants and others, the costings in the analysis should be reduced by approximately 50% to determine the impact of the new design of the Defective Concrete Products Levy on costs. This report is available on my Department's website.
Therefore, while it should be noted that costs are subject to range of variables, and based on the situation in late 2022, the levy is expected to result in an increase in hard costs of between €400 to €800 for a typical 3 bed semi-detached house and between €375 to €550 per apartment in a typical 6 floor apartment block with basement carpark. When soft costs including cost of finance, fees, risk and contingency are included the impact of the levy for typical dwelling was estimated to be €700 to €1,100 and for a typical apartment €650 to €1,050.
The percentage increase in construction and development costs of the levy was therefore estimated to be approximately 0.2% to 0.45% for a typical semi-detached dwelling and 0.15% to 0.2% for a typical apartment for both hard and soft costs.
The levy only came into effect last week, on 1 September 2023. The Deputy will also be interested to note that I announced on Wednesday 6 September my intention to bring forward legislation in Finance Bill 2023 to exclude the value of pouring concrete used in pre-cast products from the scope of the levy with effect from 1 January 2024. I intend to introduce a refund scheme for the interim period of 1 September 2023 to 31 December 2023. Details of the amendments will be published in Finance Bill 2023.
