‘Token’ vacant house tax could raise just €2.4m, says Labour

A NEW levy on vacant homes touted as a key measure in the Government’s plan to release housing stock has been dismissed as a ‘token tax’ after it emerged it will only target a fraction of the country’s empty units.

It comes after Finance Minister Paschal Donohoe confirmed the vacant homes tax (VHT) will only affect 8,000 of the country’s estimated 66,000 vacant homes.

Launching Budget 2023, Minister Donohoe said the tax would be self-assessed and raise as little as €3m a year.

However, in response to parliamentary queries from Labour finance spokesman Ged Nash, Mr Donohoe admits the yield from the tax may even be lower than the modest €3m target.

Mr Nash had sought figures on the estimated number of housing units that are expected to be subject to the tax next year.

In his reply, the minister said: ‘It is tentatively estimated that less than 15% of the total properties reported as vacant may be in the scope of the tax.

‘The figure is based on the Revenue data and considered the number of long-term vacant properties [those unoccupied for over 12 months], their valuation band, as well as their reasons for lying vacant which may correspond with an exemption from the tax.’

Mr Donohoe said: ‘As stated in my budget speech, this measure aims to increase the supply of homes for rent or purchase to meet demand, rather than raise revenue.’

He conceded ‘The estimated yield is low, as I anticipate this tax will influence behaviour and lead to property owners putting their vacant properties to more effective use.

‘As such, the number of properties which will be subject to this tax and the eventual yield may be lower than estimates provided.’

Mr Donohoe acknowledged that ‘certain assumptions were made based on Revenue data ‘in arriving at the estimates for the budget documentation’.

However, the minister’s answer got short shrift from Mr Nash, who described the tax as ‘the very definition of a token tax’.

The Louth TD told the Irish Mail on Sunday: ‘The rate is set so low that it will be easy to absorb. There are also so many exemptions that, by the time the Government finishes, it will only apply to around 8,000 homes’ he said, estimating that the tax, based on the figures supplied by the minister, may only raise €2.4m.