Property based tax incentive schemes in Ireland: a critical appraisal

There has been phenomenal growth in Irish property values in residential, commercial and office property over the last decade. During this period, the supply of new residential properties has nearly quadrupled. In parallel, prices on aggregate rose significantly during the period, as demand outstripped supply. Major city centre areas have been rejuvenated while the borders, and midlands have seen a major uplift in construction activity. The reasons for these changes are numerous. Property based tax incentive schemes, both area-based and activitybased have contributed to increased levels of construction activity. Many of these tax incentive schemes are due to come to an end in July 2006. Will the impending cessation of many of these property based tax incentive schemes mark a watershed for the Irish construction sector, or are these tax incentive schemes a subsidy which are distorting the market place, in an economy where the construction sector at full employment?