Mr. Charlie McCreevy:

But the Finance (No. 2) Bill 1998, the main things it did was it disallowed the interest on persons purchasing second homes; it changed the stamp duty regime substantially; we had a reduction of CGT and development of land from 40% to 20%, if it was to be developed within five years, and the penalty was to increase CGT to 60% if hoarded. There was an interesting, very interesting Dáil debates at the time. The two main Opposition parties opposed it. One of the Opposition parties was considerably against the interest ... the disallowance of interest deductibility. And I remember him saying, and you can check the Dáil debates, that all this would have unintended consequences. So that was the effect of the first Bacon report.

Then we have the second Bacon report, and when the second Bacon report came out, prices had slowed down since 1998, but rents ... prices had gone down on houses, but rents had gone up 24% in Dublin and 17% in the rest of the country. Apartment prices had gone up 24% and there were about 42,000 units completed that year. Now, actually that report of second Bacon 2 praised the new student accommodation tax relief that I had in budget 1999. And it also praised the new urban tax scheme for 43 towns cities that was in that time as well. And then we had the Bacon No. 3 report that reported in June 2000. And that report concluded firmly that rates of increase in prices on new and existing homes in Dublin were down sharply since 1998, and that's what the report said. It also said that immigration of 200,000 to the country was expected over the next seven years, and this led to the Finance (No. 2) Bill of 2000, and that third Bacon report and the subsequent Finance (No. 2) Bill 2000, led to the introduction of the 2% anti-speculative tax, and tax of 2% of non-principal private residences. Now, the interest deductibility and other changes were made subsequently, as Deputy Doherty has pointed out, and the reason for so doing was that we got a fair shock as to what was happening in the economy in 2001 into 2002. As I referred to early in my address, growth had fallen off considerably. There ... if you read the figures from the CIF and from the housing bodies, there was considerably less economic activity in the housing sector, or in the construction sector generally, and unemployment in that area was starting to rise, and that's why we reversed our approach on deductibility and the 2% anti-speculative tax did not take place. It was really made redundant as well.