Bertie Ahern (Dublin Central, Fianna Fail)

This matter has been around for some time. It is not true to say that it has only been raised in the past year or two.

Buyers of development land can reduce stamp duty liability through mechanisms such as licensing, resting on contract and long-term lease arrangements. Under these mechanisms, land is purchased for development without conveyancing, transfer of legal title or submission of stamping by Revenue. It thereby avoids, rather than evades, stamp duty liability. A number of anti-avoidance measures were included in the Finance Bill last year to enable the Minister to deal with such practices whenever it was deemed appropriate to so do, having regard to the state of the housing sector and market conditions. This is the reason the provisions were subject to the introduction of a commencement order, as are many of these areas.

Goodbody Economic Consultants was commissioned to examine independently the economic and market consequences of commencing the provisions, while taking into account the changes that occurred in the housing market from the time the Finance Act 2007 became law at this time last year. In line with prior commitments, the report was published by the Department in either late December 2007 or January 2008. Its main points were that the commencement of such anti-avoidance provisions might increase the cost of land by approximately 10%, which would result in a decline in transactions and would increase house prices; and that the impact of the section, which is known by the industry and to the tax authorities as section 110, would result in driving activity levels far below long-term housing requirements, thereby contributing to a spiral of increasing prices for first-time buyers as fewer units would be built. The report recommended not commencing section 110 because it risks "exacerbating the down turn in the property market", which would have a negative impact on employment and tax revenues.

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