Joan Burton (Dublin West, Labour)

The purpose of this amendment is to charge the proposed commission on taxation with examining the anomalies in the stamp duty regime. During last night's brief Second Stage debate, I had time only to refer to the situation of those people caught out by the backdating to 31 March. There are other anomalies relating to stamp duty, which I hope the Minister will review.

One of these relates to the capacity of developers, builders and others engaged in the construction sector to employ mechanisms for the avoidance of stamp duty, either through licensing arrangements or through the sale of shares in a company so that the transfer rate is that applicable to shares as opposed to the residential rate of 9%. These avoidance mechanisms are part of the same old story. People on modest incomes who purchase modest properties, including those trading up, are subject to a fairly high level of stamp duty. I acknowledge that stamp duty is high in Ireland probably because we do not have the year-on-year property taxes that exist in many other European countries. We have instead one regime which applies the full weight of stamp duty to people purchasing houses in which to reside and another which allows the construction industry and people who buy significant properties to make use of avoidance mechanisms. During the previous Dáil, the Minister conceded on a number of occasions in debates on stamp duty that he was concerned the people to whom I refer were avoiding payment. He introduced an amendment to the last Finance Act to tighten up some of the stamp duty avoidance mechanisms, particularly in regard to licensing arrangements, but he failed to have the relevant sections commenced.

This is an area that deserves scrutiny by a commission on taxation from the point of view of equity and tax justice for people in the PAYE sector. It is difficult enough for people to pay tax at any time, but it is particularly galling to believe that one law exists for people on modest incomes in the PAYE sector and an entirely different one for multi-millionaires. We have seen significant property transactions being conducted in certain parts of Dublin, such as the sale of hotels in Ballsbridge. I challenge the Minister to indicate how many of those transactions were subject to the 9% rate of stamp duty. I am confident that a large proportion were effected by the transfer of shares attracting a lower rate. I have put these questions to the Minister on previous occasions and wonder whether he will comment.

I do not want to fight the general election again because the people have voted and we have an outcome. The position taken by Fianna Fáil on stamp duty was a fix-up solution of creating an absolute exemption for all first-time buyers regardless of the value or size of the property. Last September the Progressive Democrats Party brought stamp duty to the national stage as an election issue, with Michael McDowell taking to the airwaves to argue for major changes to stamp duty on the grounds that most of the income derived by the Government was unnecessary and allowed for tax reliefs worth billions of euro. However, even the Progressive Democrats argued that a house with a floor area in excess of 1,350 sq. ft., or an average three or four bedroom house, should not be totally exempt from stamp duty. The present proposal is to completely exempt all first-time buyers. We have no problem with exemptions for those purchasing modest former local authority houses worth €400,000 or €500,000 in Cabra, Finglas or elsewhere in the Dublin area. However, a person who has the means, as a first-time buyer, to buy a luxury residence for €6 million or €7 million, will be completely exempt from stamp duty. Such a person's saving on stamp duty could be multiples of the cost of an affordable home.

The second anomaly, which is a serious social problem that the Minister must address, is that in the past seven years the development of affordable housing has meant that many couples have bought an apartment. They are now in a position where they have, or intend to have, a family and they need to trade up to a house. They bought their affordable apartment free of stamp duty. This issue is of particular concern where people are buying a second-hand property. It is not such an acute problem outside Dublin or in rural areas where the supply of new properties at affordable prices is much greater. However, in cities such as Dublin, Cork, Limerick and Galway, where second-hand properties are often all that is available to people in the areas where they work, they face very significant stamp duty bills although their means are modest. The position of people who are trading up to buy a family home in which to reside should be the subject of some concern by the Government.

While the Minister's proposals to increase mortgage interest relief are welcome they do not address the fact that people who move from an apartment to a three or four bedroom house to cater for a family may, depending on where they buy, face stamp duty bills of between €25,000 and €70,000. That is a lot of money, representing a very large additional mortgage commitment. I urge the Minister and his officials to examine this issue in the context of housing and social needs.

These are some of the areas that the commission on taxation, when formed, should examine. The Labour Party shares the Minister's concern that the revenue base from stamp duty be conserved. The pre-budget estimates and review suggested that the total take on stamp duty last year from first-time buyers was approximately €70 million. The stamp duty take from first-time buyers buying properties worth less than €635,000, that is, the people to whom I have referred, was €66 million. In the Fianna Fáil manifesto, the Minister estimated that for the rest of 2007, mortgage interest relief and stamp duty relief would cost €88 million. Therefore, the price of the package before us is relatively modest.

I appreciate that the Minister's objective is to conserve part of the taxation base, but there are key people who not being facilitated by this move. The biggest problem is for individuals and couples who have or intend to have a family but have lost their first-time buyer status because they bought an apartment. If the apartment is on the fringes of Dublin or other cities, the capital appreciation may not be significant. They now need to buy a family home to live in. They are not investors and their plight is one of particular concern. I hope the Minister will address this issue.

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