Coveney defends income tax refunds for first-time house buyers

Minister for Housing Simon Coveney has defended his income tax refund scheme for first-time house buyers after his rival in the Fine Gael leadership race, Leo Varadkar, threatened to scrap it.

Mr Varadkar said he would bring forward a review of the scheme due to take place before the next budget. He said he would scrap it if it is found to have driven up house prices, and he would replace it with incentives to fund the construction of so-called “housing with care” for older people who want to downsize from larger properties.

The “housing with care” programme would seek to build homes nearer to town centres that can be easily accessed by care workers.

However, Mr Coveney defended his policy, which was one of the “big ticket” items of the last budget.

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"It has resulted in an awful lot more homes to be built for first-time buyers," Mr Coveney told RTÉ News. "I cannot support a position where we lock first-time buyers out of the market in order to keep house prices down."

Mr Coveney also called Mr Varadkar’s manifesto, which was launched on Monday, a “list of spending commitments”. Mr Varadkar’s campaign declined to comment on the criticism.

Mr Varadkar’s manifesto outlined a number of policy proposals, such as greater infrastructural spending, merging the Universal Social Charge and PRSI into a new system of social contributions and equalising tax credits and rates for the self-employed.

Essential services

Mr Varadkar said he would introduce legislation banning public sector workers from striking in essential services if he is elected Taoiseach. However, this would only happen following a Labour Court recommendation that would be legally binding on staff and employers.

Mr Varadkar also said water charges should be refunded as soon as possible, and maybe this year.

On abortion, he said he would favour abortion in circumstances where the health of the mother was at risk, as well as for fatal foetal abnormalities, but he did not want “abortion on request”. However, he did not want his personal views to dictate Government policy on abortion, adding that if he was party leader there there would be a free vote in Fine Gael on the issue.

The Dublin West TD favours amending the national debt target from 45 per cent of GDP to 55 per cent of GDP, and use the greater leeway for increased infrastructural programme.

Sources in the Coveney camp claimed this showed Mr Varadkar was "abandoning" the economic policy pursued by Enda Kenny and Michael Noonan.

Other commitments include linking future increases in the old age pension to the rate of inflation, while also preparing for future pension provision by enrolling everyone below the age of 60 into a personal savings account.

Income tax

“Contributions will be made by employees and employers with a bonus from the State similar to the SSIA,” the manifesto says.

Mr Coveney has also committed to reducing the marginal rate of income tax to below 50 per cent for everyone, similar to Mr Varadkar, and is also in favour of infrastructural spending.

Mr Varadkar said his policy proposals “illustrate the direction I believe we need to take”.

"They set out a longer-term vision for our country. The exact timing and detailed implementation measures would be a matter for debate and discussion in Government, and ultimate decision by the Oireachtas. "

Initiatives earmarked for capital spending include the Dublin Metro, at a cost of €2.5 billion, the M20 Cork to Limerick road, costing a €1billion, as well as other road routes.

Budgets for sports, arts and culture would also be increased, as would the back-to-school clothing and footwear allowance, fuel allowances and funding for school meals.