Sinn Féin spokesperson on Finance Pearse Doherty TD has responded to changes announced today to the Defective Concrete Products Levy by the Minister for Finance.
Today’s announcement follows warnings raised by Teachta Doherty with the Department of Finance on 26th October that precast products would be subject to the levy despite false statements made by Paschal Donohoe to the contrary.
The Donegal TD again called for the tax on new homes to be scrapped.
Speaking today, Teachta Doherty said:
“On the 1st of September the Government pushed ahead with their deeply flawed concrete products levy, despite all the warnings that this levy will result in higher housing and building costs for workers and families.
“This is ultimately a tax on new homes.
“In October Minister Paschal Donohoe made repeated claims that the levy excluded precast products, from blocks and paving to lintels and posts – these claims were false.
“It was clear as soon as the Finance Bill was published that poured concrete, a key element of precast products, would be subject to the levy.
“I raised this directly with Department officials at the Finance Committee on the 26th October.
“The false statements from Minister Donohoe led to confusion within the construction sector and among wider industry.
“Minister Donohoe should correct the Dáil record.
“The Government applied a guillotine on this legislation – ensuring that the levy was not properly scrutinised.
“I warned at Report Stage of the Finance Bill that there was a flaw in the levy that would come back to haunt the Government.
“This has now come to pass with the Minister scrambling to address a flaw I raised last year.
“I believe there could be other problems with the legislation underpinning this flawed levy which I have raised directly with Revenue.
“While I welcome the fact that Minister McGrath will now respond to the issue I raised with the Department in October last year, the Government should scrap this flawed levy, which will increase construction costs and house prices.”
NOTES TO EDITOR:
On 26th October 2022, Teachta Pearse Doherty raised the drafting of the legislation underpinning the Defective Concretes Block Levy with the Department of Finance at the Finance Committee, warning that precast products would be subject to the charge, despite statements to the contrary by then Minister for Finance, Paschal Donohoe.
You can find a transcript of those proceedings here and an extract below:
Deputy Pearse Doherty: Can I just clarify because I do not think I made my point clear here, to assist Ms O’Callaghan? This relates to a person who is producing concrete and selling to the domestic market, which obviously has a levy in place. That person, for example, has one company that has been set up as Pearse Doherty Concrete Supplies Limited but also has a company called Pearse Doherty Precast Concrete Sills Limited on the same site. If my concrete company is supplying and pouring concrete, which is captured under the levy, to create the sills, slabs or lintels, does a charge apply, since poured concrete is included?
Ms Jacqueline O’Callaghan: They are no longer within the list of products that are subject to the levy.
Deputy Pearse Doherty: Is poured concrete included?
Ms Jacqueline O’Callaghan: Poured concrete is. If one is supplying poured concrete, then it is within the charge. We would have to go through the example that the Deputy is giving. We would need more details about the type of poured concrete. I dare say, when the Deputy talks about poured concrete, that he is talking about a lorry coming and supplying poured concrete to another place. If someone was creating a batch then supplying it, we would have to go through the details to see exactly what the process is.
Deputy Pearse Doherty: There is a certain danger here. In the past, concrete would have been poured into the frames for lintels, left to cure for a while, then taken out and the frames would be used again. If there is a situation with two separate companies rather than one, then the concrete that is being used for the pre-cast will be subject to the charge.
Ms Jacqueline O’Callaghan: If it is poured concrete within the meaning here, then it would be, but we would have to go through the details. We would need an example of a specific place to see how the details would apply. The Deputy is talking about two companies operating in one plant.
Deputy Pearse Doherty: Exactly. There are two companies, which will happen numerous times. I do not know if they are still operating but I know of a company that was doing that. If companies are supplying to the domestic market because they have their concrete wagons on-site, they will have a separate company set up. They are invoicing internally. Therefore, the concrete that is used on sills, lintels and kerbs would be subject to the tax.
Ms Jacqueline O’Callaghan: We would have to look at a specific case to see exactly how it is operating.
Deputy Pearse Doherty: Part 4 of the VAT directive defines poured concrete as the supply of concrete that is ready to pour. It does not suggest that it even has to be in a lorry, just that it is ready to pour. It can come straight out of the batch. It excludes the margin scheme, which is double taxation. It appears that if two companies are operating, with one supplying the concrete to pre-cast, then they are captured.
Ms Jacqueline O’Callaghan: It would appear that way. I cannot say for certain because I do not have the facts. I am not an expert in this market so I would have to pass this back to Mr. Hennessy.
Ms Jacqueline O’Callaghan: There are other examples that we could go through. In group companies, there are many ways to transfer items without going through a sale or even a legal transfer. As I said, that is how we understand the policy intention.
Deputy Pearse Doherty: The same reason that the Revenue Commissioners have captured that applies in the example I have, which is not about a developer but a company manufacturing pre-cast concrete. It is captured even though pre-cast concrete is excluded, since the material going into the moulds is now included. I have significant concerns about this.