The principal tax measures for which legislation is in place and which will take effect in 2019 with an expected impact on the fiscal space are as follows:
- Finance Act 2017 legislated for the tapered extension of Mortgage Interest Relief through to the end of 2020. Mortgage Interest Relief is a tax relief based on the amount of interest paid in a tax year on a qualifying mortgage loan taken out between 2004 and 2012. The effect of the measure introduced in Finance Act 2017 was to provide for 75% of the relief in 2018, 50% of the relief in 2019 and 25% of the relief in 2020.
- Four measures have sunset clauses dated 31 December 2018 (cost figures relate to the last year published):
- HRI (Home Renovation Incentive) (s.477B of the Taxes Consolidation Act, 1997): Direct cost to the Exchequer was €21.4m in 2014, note that HRI relief is split into two years hence the lag in statistics);
- Start Your Own Business (s.472AA of the Taxes Consolidation Act, 1977): Direct cost to the Exchequer was €15.2m in 2015;
- Stock Relief (s.666 of the Taxes Consolidation Act, 1997) and Stock Relief for Young Trained Farmers (s.667B of the Taxes Consolidation Act, 1997): Direct cost to the Exchequer was €6.1m in 2015;
- Transfers of agricultural land to young trained farmers (s.81AA of the Stamp Duties Consolidation Act 1999): Direct cost to the Exchequer was €4.6m in 2016.
- The Deposit Interest Retention Tax (DIRT) rate is set to decrease by 2% in 2019 to 35% and by a further 2% in 2020 to 33% (this was provided for in section 21 of the Finance Act 2016).
The Deputy may also wish to note that a Charities VAT compensation scheme was announced during Budget 2018. This will take effect from 1 January 2018 but will be paid one year in arrears i.e. in 2019, charities will be able to reclaim some element of the VAT costs arising in 2018. Charities will be entitled to a refund of a proportion of their VAT costs based on the level of non-public funding they receive. A capped fund of €5 million will be available to the scheme in 2019. It is intended that the relevant legislative instrument to give legal effect to this provision will be introduced in 2018.
The effect of the above measures on fiscal space, along with other discretionary revenue measures are set out in Table A6 of the Stability Programme Update, which shows the net impact in 2019 as 0.0% of GDP.