As the Deputy may be aware, the Living City Initiative (LCI) (provided for in Finance Act 2013 and commenced on 5 May 2015) is a tax incentive 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 predetermined 'Special Regeneration Areas' (SRAs). Such developments may include both residential and commercial elements.
The LCI was reviewed as part of the Tax Strategy Group process in 2022. The review noted that the scheme is a very specific tax incentive, established in compliance with the Department of Finance’s Tax expenditure Guidelines, with the aim of encouraging businesses and home-owners back to the centre of Irish cities in order to preserve historic buildings in special regeneration areas.
In relation to the creation of new tax incentives, and the Deputy will appreciate, decisions regarding taxation measures are usually made in the context of the annual Budget and Finance Bill process and at the appropriate time. Such decisions also must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines. The guidelines make clear that any policy proposal which involves tax expenditures should only occur in limited circumstances where there are demonstrable market failures and where a tax-based incentive is more efficient than a direct expenditure intervention. In relation to this final point, there are already significant direct expenditure measures, such as the Croí Cónaithe (Towns) scheme, in place to promote residential development in urban areas.
Ireland’s past experience with tax incentives in this sector strongly suggests the need for a cautionary stance. They created distortions in the construction sector and were, with ended a over decade ago.
I will continue to work with my cabinet colleagues to ensure that any further interventions in the housing market are appropriately calibrated, represent the best use of scarce public resources and boost the supply of housing in both the public and private sectors.
I have no plans at present to commission a report along the lines suggested.
