Remember Bruton’s VAT on our children’s shoes? Now it’s blocks
FOOTAGE of John Bruton on his way into the Dáil to deliver his Budget speech for 1982 captured a young minister for finance confident that the country would recognise the need for tough love.
The country was on its uppers and Mr Bruton stopped to give a hopeful prediction to a waiting reporter.
‘It’s going to be a fairly tough Budget but I believe when it’s seen in its overall context, it will be seen to be both fair and necessary,’ he said.
By nightfall, the uneasy Fine Gael-Labour coalition had fallen on the issue of VAT on children’s shoes. It was a minor detail in the broader sweep of that Budget, but it was emotive in a way that the minister, the Cabinet and his officials failed to foresee. The upshot was a day that has endured in infamy in political lore.
Warnings from history are well heeded, and Ministers Paschal Donohoe and Michael McGrath must be shifting nervously as anger builds at what seemed an incidental measure in Tuesday’s Budget.
The 10% levy on concrete blocks, which will come into effect in April 2023, is predicted to raise €80million a year and this is in response to the mica redress scheme whose cost is expected to exceed €3billion.
Given that the yield from the concrete levy will hardly make a dent in that bill, its introduction appears to have been symbolic, and taken as evidence of the State taking action against those who may be responsible for a saga that has ruined thousands of lives.
Yet the Government either underestimated or entirely missed the ramifications of the levy, and the fact that it will cause more hardship to those struggling to buy homes in a dysfunctional property market.
Whether it will inflict any punishment on those ultimately responsible for the defective blocks that have destroyed houses in Donegal and Mayo, and in some other parts of the country, is much less certain.
Conclusively proving who is responsible for the production of blocks that contained too high a percentage of muscovite mica – a naturally occurring mineral that absorbs moisture, expands and causes blocks to crack – has proven remarkably difficult.
Quarries that produced the affected blocks protest their innocence, and the absence of a functioning regulatory system has also been blamed.
At the heart of the mica story are the affected families, yet the gesture politics that saw the inclusion of the concrete levy in this week’s Budget now threatens to put an entirely new cohort of the population under pressure.
A broad-based tax on concrete products is certain to punish those building or buying new homes, or hoping to extend or upgrade existing ones.
Finding a way to target the levy more precisely on those actually responsible for producing and selling defective blocks is obviously going to be difficult if they still haven’t been identified.
But that is no justification for the unthinking measure presented this week.
If the Taoiseach and ministers want to hold the construction industry responsible, then they should tax their profits.
It’s difficult to conceive of a levy that will not eventually end up tagged on to the price of new houses – the present one is indefensible.
The pace of retreat will now be the issue at hand, given the reactions triggered at Fine Gael and Fianna Fáil parliamentary party meetings.
Caught between a transparent gesture in the direction of lamentably loose construction standards, and the threat from disgruntled backbenchers on a hairtrigger issue such as housing, the Government will surely be forced into a pragmatic climbdown.
The dangers lurking beneath benign-seeming tax measures are, after all, recorded in history.