Return Of The Brown Paper Bags

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drawings2rezoning

Rezoning plans (top) and an extract from the Moriarty Tribunal Report

Actio Non Accrevit writes:

“The NAMA Act 2009 as amended by Section 25 of the Finance Act 2010 provided that where land was sold on or after 30 October 2009, and the land in question had been re-zoned since 30 October 2009, then CGT at a rate of 80% applied to any increase in the market value of the land which is attributable to rezoning, which could not be offset against capital losses incurred on the disposal of other assets.

This was known as the Windfall Tax and was applauded by Justice Michael Moriarty in his tribunal findings as a dramatic measure to reduce corruption.

One little-discussed change in Budget 2015 was the repeal of this tax, which had been been strongly and persistently criticised by persons working in the property industry as a serious obstacle to the development of new housing. Although they would say that in circumstances where rezoning and greater capital gains made by developers benefit property professionals generally….

However, is this really true in circumstances where there is already no shortage of land zoned for residential development? According to the  Society of Chartered Surveyors there is already enough land zoned for housing in greater Dublin to build 100,000 dwellings.

What is clear is that the ‘windfall tax’ has been quietly abolished and the risk of rezoning corruption is back on the table again. The more people who know about this, the better chance we have of preventing such corruption…Thank you.”

Thanks Ossian Smyth

10 thoughts on “Return Of The Brown Paper Bags

    1. DoM

      Well it was introduced after the housing market plummeted – hardly likely to be many people trying to re-zone land in that kind of environment, was there?

    2. Zynks

      Scenario: A developer buys agricultural land and gets it rezoned. Then proceeds to build a housing estate and sells the units away. The Revenue would have big problems to identify which part is ‘windfall’ and which is added value/margins obtained from the development investment.

      Also, if the developer had two concurrent projects and only one was on rezoned land, it would be rather easy to shift the profits from the rezoned land project to the other.

      Still, not an excuse to remove the tax, just to perfect the definition of the tax.

    3. Bonzor

      @Karl

      The tax was never going to raise money during a time that no land was being rezoned. What was ignored in Arthur Beesley’s analysis is that we’re on the cusp of a huge spate of rezoning, and small numbers of people stand to benefit massively. That money should be going into public funds, not enriching a small cabal of landowners and developers. It’s a complete cop out, designed to buy the loyalty and wallets of FG backers in advance of an election, and the media completely failed to state that because they’re so dependent on property-related advertising money.

  1. Kill The Poor

    And it was hardly quiet, it was said in the budget speech and covered in the papers and on some radio shows I heard.

    Maybe Ossian Smyth had his eyes closed and fingers in his ears last week and missed it.

  2. SOMK

    It’s funny, you finally for a second think at least someone in charge knows what they’re doing and is somewhat capable, when the central bank is setting fixed deposite rates for mortgages (which short term screws first time buyers now, but long term will mean you get more sustainable house prices, fewer defaults etc.), and then you see stuff like this, the result of backroom deals and chats on the golf course, swept under the carpet and not mentioned nor analysed in the media (which is highly reliant on property for ad revenue), this in and of itself should be a scandal of far more significance that say the Garth Brooks thing. This is same old, same old back on the table. This is exactly the kind of thinking that gives the most sparsely populated country in Western europe a housing shortage, makes Dublin a worse case scenario in terms of urban sprawl for the EEA, it’s the attitude of people who are running a country, not as a place where millions of people try to live and get by in, but as a club for your mates.

  3. Sinabhfuil

    It wasn’t intended to raise tax; it was intended to stop brown-envelope-fuelled rezoning of green areas purely for the Lotto win prices, which then pushed up the price of homes past what wages can afford.

  4. ahjayzis

    Ah for fvck sake…

    A crisis utterly, utterly wasted. All this pain to just get back into the same bent, mis-managed, wasteful kip we were before the bust.

    1. Zynks

      As long as we keep electing governments run by party ‘leaders’ with 17,000 votes and the services of a whip, we will continue to have some lobbies securing financially beneficial favours.

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