Ireland is known throughout the world of having a very low corporate tax rate, which draws in many multinational companies. In addition, foreign property investment funds are also paying very low taxes and are walking away with massive profits. Many believe this is hurting the average taxpayer and are calling for an increase on taxes to foreign investors.
A main critique to this is the current housing shortage and how it may encourage less houses being built. However, this fund is buying large chunks of land and holding it to draw prices up and then selling these properties at premium prices. The housing shortage is due to the lack of affordable housing, not high-end luxury houses. Pearse Doherty, finance spokesperson, has been raising this issue publicly after he learned that only approximately 13 million Euros were collected on taxed profits out of the hundreds of millions that the companies earn. One of the tax loopholes that companies use is the Fine Gael’s tax regime. These loopholes allow them to avoid cooperation taxes on rental income and tax on gains if they cash in on their assets holding them for three years.
Doherty commented, “In the midst of a severe housing shortage and at a time of historically high rents, it is simply inexcusable that the government continues to offer such lucrative tax incentives to property investors who drive up prices and squeeze families out of the rental market.” Increasing the tax by a couple percentages would provide the government more money to deal with the rise of homeliness and other social factors. Doherty is concerned with the practices that foreign investors are using to drive up prices and make their properties worth more money. It is contributing to the housing shortages throughout Ireland and the rising prices.
The government has since agreed to review the tax policy and decide if a change to the bill is needed. The margins for the foreign investors would still be profitable and this may slow down the number of investors but would increase taxes collected by the government.
