The Government has agreed that the concrete levy announced in the Budget will be cut to 5% rather than the 10% announced in the Budget last month.
It will also now be introduced in September 2023 rather than next April.
The charge will not include pre-cast concrete products in an effort to ensure that jobs in this export-led sector are protected, but will be applied to concrete and blocks coming from Northern Ireland.
A 10% levy on concrete blocks, pouring concrete and certain other concrete products in order to raise €80m annually to fund the defective blocks scheme for redress for homeowners affected by mica was announced in the Budget last month.
Minister for Finance Paschal Donohoe said the levy will now raise €32m annually.
He said it is a fundamental point that the Government needs a contribution from the construction sector to fund the repair of defective homes, but the levy itself would not have a sunset clause.
“This measure will be in place, I expect, for many, many years,” he said.
For a three-bedroom house this levy could lead to an increase in building costs of “between 0.2% and 0.3%”, the Minister added.
The Construction Industry Federation said given the volatility of the market, the levy should be “resisted” until a full regulatory and economic impact assessment has been completed.
“We need more clarity on what products the levy will be applied to and its wider impacts,” a statement said.
“Even the September 2023 time frame is out of step with the needs of the public and economy at this time, when we are facing a housing crisis and unprecedented inflation.”
The industry group said the proposed levy is a “blunt instrument which is not targeting those responsible for defects”, saying the buyer will ultimately pay the cost.
“The proposed levy is a blunt instrument, which is not targeting those responsible for defects. The first-time buyer, public and private client will ultimately pay the cost of this,” it said.
“This is a quality control issue for suppliers of raw materials and manufacturers into the construction industry.”
Minister Paschal Donohoe speaking at a press briefing today (Credit: RollingNews.ie)
Yesterday it was reported that the Minister for Housing had warned the Minister Donohoe that Fianna Fáil TDs and Senators had serious reservations about the 10% levy.
In the letter from Darragh O’Brien to Minister Donohoe, which was seen by RTÉ News, Mr O’Brien told his Cabinet colleague that “these concerns were particularly acute in the context of inflammatory pressures on the building sector and (the) need to boost housing supply.”
The correspondence, described as “urgent”, followed a meeting of a sub-group of the Fianna Fáil parliamentary party last Tuesday.
This morning Tánaiste Leo Varadkar said a concrete levy was needed to “repair the homes of thousands of people around the country”.
“Under the last government we repaired almost all of the pyrite affected homes,” he said.
“Under this Government we want to make a really good start on repairing the mica homes and also a lot of the defective apartment buildings that we have in our cities and that is a multi-year multi-billion-euro commitment.
“And you can’t make that kind of commitment without a revenue stream to pay for it, and that’s the reason for the concrete block levy.
“We know from across the water the consequences of making long-term financial commitments and not funding them and we can’t repeat that mistake.
“So, this is all about repairing people’s homes, mica homes, defective apartments, the remaining pyrite homes, but it’s going to cost a lot of money and we need a revenue stream to put against it.”