Heritage Council Proposes Living Town Tax Incentive Scheme

The Heritage Council is proposing a Living Towns tax incentive scheme to encourage investment in protecting and enhancing heritage buildings. The Council is concerned that, with the collapse of public funds available for such investment in recent years, many older buildings in town centres, which are under-used and in need of investment, will decline further.

The Chairman of the Heritage Council, Mr. Conor Newman, states: “If the infrastructure of heritage buildings in town centres is allowed to continue to deteriorate it will undermine the socio-economic viability of these areas and could decay beyond a critical point from which recovery would be particularly difficult. Vibrant historic streetscapes appeal to people for shopping, work and leisure and this is reflected in the most successful thriving towns and urban areas across Ireland. Research shows that investing in our built heritage delivers broad public benefits. ”

He was speaking at the launch of a special study commissioned by the Council from economic consultants, Peter Bacon & Associates, entitled Assessment of Possible Fiscal Incentives in Relation to the Built Heritage in Ireland’s Towns, to see if certain fiscal instruments could be used to incentivise investment in the built heritage in Irish towns.

One of its main proposals is to revamp and expand the Living Cities Initiative, which was introduced on a pilot basis in Budget 2013, and rename it a Living Towns Initiative. This would provide allowances against income tax for owner-occupiers and investors with investments in excess of 2% of the building’s value. Preliminary estimates suggest this would represent a gross Exchequer cost of €5.8 million annually.

The Report also proposes that securing a much greater share of National Lottery funds for heritage should be a priority objective for agencies in the sector, and that a strategy should be devised to achieve this outcome.

Mr. Newman comments: “The National Lottery identifies heritage as a beneficiary area but the amounts provided to this ‘good cause’ are less than 2% of total distributions by the lottery. There are also questions as to the additionality of this funding. In contrast, the Heritage Lottery Fund in the UK is a major force in terms of assisting the built heritage, introducing innovations and undertaking research.

“Based on Heritage Council data, the allocation to heritage from the National Lottery amounted to 1.4% of the money that was raised for ‘good causes’ in 2012. This would certainly suggest that a meaningful reconsideration is required regarding the allocating of lottery to support heritage”.

Also speaking at the launch of the report, Mr. Peter Bacon said that the Exchequer could recoup expenditure from tax incentives for heritage buildings through the new economic activity generated, and that consequently the public sector should invest in heritage without relying on arguments based on the need to stimulate the economy.

He also said that “a lot of damage was done during the boom years not just to the physical attributes of heritage buildings in town centres, but to the physical and social structure of towns as well. Activity has been displaced to towns’ periphery and, while there are exceptions, a notable hollowing out of Irish towns has occurred”.

This report comes against a background of a dramatic fall-off during the economic recession in the amount of public money being provided to protect and upgrade heritage structures. “Many older buildings in town centres are under-used and in need of investment, but the amount of public funds available for such investment has fallen in recent years. For example, the grant scheme operated by the Heritage Council, which had provided over €8 million annually in grants to a range of projects, including the built heritage a few years ago, was reduced to €3.8 million in 2012 and was suspended altogether in 2013 due to a lack of resources”, Mr. Starrett stated.

Besides the Living Towns proposal, the report suggests other fiscal incentive options for consideration, including:

  • the cut-off limit for investment in restoration of heritage properties that can retain VAT exempt status should be raised from 25% to 65% of their value.
  • the stamp duty on heritage buildings in designated areas should be abolished.
  • the Capital Gains Tax exemption that currently applies to principal private residences should be extended to all heritage properties in defined areas such as Architectural Conservation Areas (ACAs).

The Report also recommends that research should be undertaken to identify opportunities for the use of EU Cohesion Funds under the 2014-20 Operational Programme to support heritage buildings, with a specific focus on incentivising investment in energy conservation.