Demolition and the Great Capone Ploy

Winston Churchill, perhaps the greatest of all Britons, famously once said: “Those that fail to learn from history are doomed to repeat it”. With that in mind, I am going to begin with a very brief but timely history lesson.

Alphonse “Al” Capone was a notorious gangster during the American prohibition era of the 1920s. As co-founder and head of the Chicago Outfit, Capone presided over an empire of crime in the Windy City. Even though he was allegedly involved in illegal gambling, prostitution, bootlegging, bribery, narcotics trafficking, robbery, and protection rackets; and even though he was widely believed to have given the order for the St Valentine’s Day massacre in which seven members of the rival North Side Gang were brutally murdered in broad daylight, it seemed that law enforcement couldn’t touch him. His reign of terror was eventually brought to an end when, at the age of just 33, he was sent prison. And his 11-year sentence was not for murder or racketeering, but for tax evasion. One of the most notorious criminals in American history and a former Public Enemy No. 1 was brought down not by Eliot Ness and his team of prohibition “Untouchables” but by the tax man.

Now maybe I am being cynical. Maybe I am putting two and two together and making six and three quarters, purely for editorial expedience. And maybe, just maybe, the latest proposals from the Chartered Institute of Building (CIOB) is merely aimed at closing a gaping legislative loophole.

Under Ireland’s current tax structure, a reduced rate of 13.5 percent VAT is applied to demolition projects. The CIOB says “this contradicts the principles outlined in the Circular Economy and Miscellaneous Provisions Act 2022, the Climate Action and Low Carbon Development (Amendment) Act 2021, and the EU Taxonomy Regulation 2020”.

The CIOB is, therefore, proposing the Government use the tax system to incentivise repair and restoration over demolition, thereby reducing the embodied carbon footprint of Ireland’s built environment. It is calling for demolition to be charged at the standard rate of 23 percent VAT, while repair and renovation activities remain at the reduced rate of 13.5 percent.

“Charging full VAT for demolition in Ireland while maintaining the reduced rate for repair and refurbishment and introducing a levy for demolition in Northern Ireland would create tax environments that reflect the principles of existing climate legislation and the urgency of the national net zero by 2050 targets,” says CIOB Policy and Public Affairs Manager, Joseph Kilroy.

On the face of it, while such a move would be entirely anti-demolition, it would unquestionably help tick a sustainability box in both Ireland and Northern Ireland. But is there more to it?

Thus far, the most high-profile demolition project to be kicked to the kerb over embodied carbon concerns is the Marks and Spencer flagship store on London’s Oxford Street. That project was halted after the intervention of the UK Secretary of State for Levelling Up, Housing and Communities, Michael Gove.

But Mr Gove is a busy man. When he is not pulling a face like a startled weasel, he is being pursued through a London railway station by a mob of pro-Palestinian protestors. He doesn’t have the bandwidth to look over every project that might waste his time or some of that precious embodied carbon he is so concerned about. Far better to simply tax demolition to the point of extinction.

Now I realise that CIOB’s initial proposals are aimed at Ireland and Northern Ireland and that those proposals impact outside Mr Gove’s domain. But read the CIOB statement a little more closely and it is clear they have their sights set on the UK as a whole.

“Currently, in the UK, renovation and retrofitting costs are subject to the standard 20 percent VAT, but demolition and new build is not, often making it more financially attractive to raze buildings to the ground than restore them, despite restoration usually being the more sustainable option. The UK’s lack of VAT on demolition makes it an outlier compared with most other nations.”

Ireland and Northern Ireland are merely a test case; a guinea pig; a legislative canary sent into the mine to check for toxicity and controversy.

And the CIOB is not above bending the facts to suit their own purposes either. It claims that “demolition and new build generate significant levels of embodied carbon as well as pollution, noise, traffic and disruption, and waste, most of which ends up in a landfill or being incinerated”.

Does it? Does it really? So the UK demolition industry’s 95 percent plus recycling rate is a work of fiction, is it?

As I said, perhaps this is all a bizarre coincidence, and maybe the CIOB really is interested only in fostering a more sustainable future for us all.

But always remember. Authorities in 1920s Chicago couldn’t take down Al Capone using legislation; so they took him down with tax instead.