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Time for a tax on windfall gains from re-zoned land
The vast profits made by property speculators on the rezoning of land by local authorities was a particularly undesirable feature of the Celtic Tiger years.
For some time, Social Justice Ireland has called for a substantial tax to be imposed on the profits earned from such decisions. Re-zonings are made by elected representatives, in the interest of society generally. It therefore seems appropriate that a sizeable proportion of the windfall gains they generate should be made available to local authorities and used to address the ongoing housing problems they face.
Social Justice Ireland welcomed the decision to put such a tax in place in 2010 and strongly condemned its removal as part of Budget 2015. Its removal has been one of the most retrograde policy initiatives in recent years.
A windfall tax level of 80 per cent is appropriate and, as the table below illustrates, this still leaves speculators and land owners with substantial profits from these rezoning decisions.
The profit from this process should be used to fund local authorities.
In announcing his decision to remove the tax, the then-Minister for Finance noted that the tax was not currently raising any revenue and so justified its abolition on this basis. However, as the property market continues to recover and as the population continues to grow in years to come, there will be many beneficiaries of vast unearned speculative windfalls. Social Justice Ireland believes that this tax should be re-introduced as part of the next Programme for Government.