Dáil Éireann - Volume 481 - 21 October, 1997

Written Answers. - Stamp Duty.

180. Mr. Hayes asked the Minister for Finance if his attention has been drawn to the fact that rates of stamp duty have not been changed over 20 years, and that, as a result of this, almost all houses being transferred currently attract the highest rate, that is 6 per cent; if he will review this in view of the fact that thresholds and rates are normally indexed or dealt with in a more equitable manner; if he will bring in changes to make the system more acceptable; and if he will make a statement on the matter. [16889/97]

Minister for Finance (Mr. McCreevy): The stamp duty code must be viewed in the context of overall tax policy. A key element in the tax reform strategy of successive Governments over recent years has been to maintain as broad a tax base as possible and to redress the tendency for earned income to contribute an increasing share of total revenues. Stamp duty on property has an important role to play in this regard by shifting some of the burden of taxation from wage and salary income to property. The stamp duty yield from the transfer of real property for 1996 was £194 million. The yield from the 6 per cent rate on real property, both residential and commercial, accounts for about 70 per cent of this yield.

It is important to note that if the bands were re-adjusted upwards or indexed, as apparently proposed by the Deputy, there would be a significant ongoing cost to the Exchequer. Furthermore, indexation of the bands would add to the complexity of the stamp duty code and given that property includes housing, commercial and agricultural [1432] property, it is far from certain what the appropriate indexation factor would be. Also it should be mentioned that property generally is taxed lightly here as compared to labour and, in fact, Ireland has been criticised both domestically and by international bodies for this imbalance in our tax system given our rates of unemployment.

As regards the effect of a reduction in the stamp duty on the property market, it seems likely that a reduction would benefit sellers most and would become built into the level of house prices generally. Apart from reducing Exchequer revenue, with no apparent benefit to the purchaser, such action could in fact further accelerate an already over-heated property market.