Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

Broadly, the risk identified by the Deputy is the reason I increased stamp duty on commercial property last year from 2% to 6%. I believed there was a risk of overheating in the sector. In particular, I believed that we were facing an issue because, from the point of view of the Government, we had a preference for economic resources and human capital to be deployed in supplying homes but instead it was being absorbed into the delivery of commercial property. We reviewed the position on rates for commercial property. We went from 9% to 6% to 2%. I decided, in the context of the evident risk, that it was appropriate to return the rate to 6%, which is where it used to be. This has meant that we have delivered a significant increase in the yield on stamp duty on commercial property. We are behind target compared with the figures we had. My expectation is that we will catch up on that target in the remaining months of the year. However, at this point it is likely that we will miss it. The question of by how much will become evident as we move into the end of the year. The way the tax operates means that it tends to be influenced by a small number of high-value transactions. As we move through the year we believe it is likely that the figures will increase beyond where we are, but maybe not come in exactly as we forecasted.

Given that I made such a significant change last year I decided it would not be the appropriate stance to take to change it again this year, especially given where we were with yield. It is a sector in which we have already made a large change in recognition of the risk that Deputy Jonathan O'Brien and IFAC have identified. Given the tripling of the rate last year I decided that a further change this year would not be appropriate. Is this something that we will keep under review? The answer is: "Yes we will."