Richard Bruton (Dublin Bay North, Fine Gael)
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I move:

(1) THAT for the purposes of stamp duty charged by virtue of the Stamp Duties Consolidation Act 1999 (No. 31 of 1999) Schedule 1 to that Act be amended--(a) in the Heading “CONVEYANCE or TRANSFER on sale of any property other than stocks or marketable securities or a policy of insurance or a policy of life insurance.”--

(i) in paragraph (4), by substituting “6 per cent” for “2 per cent”, and

(ii) in paragraph (5), by substituting “1 per cent of the consideration which is attributable to property which is not residential property” for “a duty of an amount equal to one-half of the ad valorem stamp duty which, but for the provisions of this paragraph, would be chargeable under this heading”,

and

(b) in the Heading “LEASE”, in paragraph (3)(b), by substituting “6 per cent for “2 per cent”.(2) THAT paragraph (1) of this Resolution shall have effect as respects instruments executed on or after 11 October 2017.

(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

As the Minister for Finance stated, the Finance Bill will contain transitional arrangements to cater for situations in which binding contracts have been entered into, as happened previously when stamp duty impositions were changed.

This is the resolution on the commercial property stamp duty increase and the extension of consanguinity. In 2011, the rate of stamp duty applying to non-residential property transactions was fixed at a flat rate of 2% as a supply side measure. The rate has not been adjusted since then. The effect of this financial resolution will be to apply a rate of 6% to non-residential property transactions as of 11 October 2017. An economic rationale for the measure is published as part of the budget documentation.

The commercial property market has recovered and is performing strongly. However, the recent sharp increase in investment in construction activity poses a risk that this could, if left unchecked, give rise to overheating in the sector and in the domestic economy generally. This view is shared by commentators, including the ESRI. Investment in non-residential construction has expanded rapidly in recent years and is approaching its pre-crisis share of GNI*, which is the new sustainable definition of national income.

The Minister for Finance is acutely aware that residential construction and the overall housing supply remain well below the level needed to meet demand. The Minister considers that, with the commercial market now performing exceptionally strongly, an adjustment in the rate of stamp duty on commercial property beyond the current rate of 2% is appropriate. The yield from each 1% increase is estimated to be in the order of €100 million. In addition to yielding approximately €400 million, the increase to 6% will allow the desired rebalancing of construction activity towards residential investment and help to address potential overheating in the construction sector. This financial resolution provides that stamp duty applicable to leases of commercial property will also increase to 6%.

Regarding commercial land purchased for the development of housing, the Minister announced in his Budget Statement that he will introduce a stamp duty refund scheme to assist with our housing policy challenges. The details of the refund scheme will be set out in the Finance Bill, but will be subject to certain performance criteria, including the commencement of housing development within a period of 30 months. The scheme will allow for a refund of two thirds of the stamp duty paid in accordance with the criteria to be specified in the Bill. This measure should avoid increased stamp duty feeding into house prices.

In addition, the Minister for Agriculture, Food and the Marine has highlighted to the Minister for Finance that consanguinity stamp duty relief is set to expire at the end of this year. Under certain conditions, consanguinity relief currently provides for a net 1% stamp duty rate on property transfers to certain close relations, such as a father and son or aunt and niece.

The Minister for Finance is extending this relief by three years as otherwise farmers who are planning succession based on this relief will find themselves subject to the full rate of stamp duty, which is to be increased to 6%. The Minister is also fixing the stamp duty rate for persons who satisfy conditions for consanguinity relief at 1%. This means persons availing of consanguinity relief will continue to pay stamp duty at 1% for the next three years. This change also comes into effect as of 11 October 2017.

That is the proposal being set out. As the Minister outlined, it is designed to raise duty in a way that is consistent with the position in the housing and non-housing market where one is proceeding very rapidly and the other needs attention. This is a provision in conjunction with other provisions in the budget that will help to unlock land for housing development while raising important revenue from a sector that is now in a very strong and healthy condition.

Pat Gallagher (Donegal, Fianna Fail)
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The same guidelines apply. We will have 30 minutes in total. I now call Deputy Michael Fitzmaurice who has tabled two amendments. The amendments may be discussed together.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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I move amendment No. 1:

In paragraph (1)(a)(i) of the Resolution to delete "6 per cent" and substitute "6 per cent, except where purchased for farming purposes providing that the land is held for farming purposes for a minimum period of 5 years".

No one has a problem with commercial property. There are two types of stamp duty, residential and non-residential. Anybody who talks to an auctioneer will know the first acre and the house is considered residential and is liable for the low rate of stamp duty. Other than that, the stamp duty on farmland is 2%. We have only two types at the moment. There is ambiguity in the resolution because a farmer who buys farmland - I am not talking about commercial land - will move to the other rate because there are only two types at the moment. If a farmer has a house and an acre, there is one rate, and if he or she buys 50 acres of land it will be under the other rate. I have tabled the amendment for clarity for the Government and farmers. The scenario at the moment is that if someone buys farmland and two or three years down the road they have done the duty on it, they can turn it into whatever they want. What I am saying is a farmer who buys land at the moment will now face the problem that the stamp duty will go to 6%. I have tabled a short amendment so that the stamp duty on land bought for farm use will be left at 2% if the farmer gives an undertaking that it will be used for up to five years, which is fair. That is all I am asking the Minister to do.

Dara Calleary (Mayo, Fianna Fail)
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There is an irony that the Minister is the person introducing this legislation. He was a lone voice in the wilderness of the noughties warning against dependence on stamp duty for Government revenues. I will repeat the query of my colleague earlier. Is there absolute certainty in the Department that founding the entire budget on this measure, which it is anticipated will yield €376 million, is a sustainable way of funding the budget and that the €376 million will actually be delivered? Is there certainty in the Department and the Revenue Commissioners on this estimate?

The Minister mentioned that transitional arrangements will be put in place for the Finance Bill. Will those transitional arrangements affect purchasers who have exchanged contracts but have not completed conveyance by 12 midnight? What does the Minister envisage will be the extent of those transitional arrangements? Will the transitional arrangements impact on the potential revenue from this measure?

With regard to Deputy Fitzmaurice's amendment, the Minister for Agriculture, Food and the Marine, Deputy Creed, told his departmental post-budget press conference this evening that this measure did not affect agricultural land. He was very clear on that. The Minister has mentioned the consanguinity relief and the young trained farmer relief. Can he confirm the Minister, Deputy Creed's view that this does not apply to agricultural land, something which he stated very clearly at his departmental press conference this evening?

Jonathan O'Brien (Cork North Central, Sinn Fein)
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I am sure the Minister read avidly the alternative budget we put forward and will know we also proposed an increase in commercial stamp duty. It is a very sensible move. It has been flagged in the tax strategy papers and we know that commercial lending and overheating paid a huge part in the banking collapse so it is very important that we continue to monitor it and that we take action where appropriate to make sure it does not overheat. The banking inquiry pinpointed commercial real estate as one of the major causes of the banking crash. That is why it needs to be monitored and taxed appropriately. I am very interested in Deputy Fitzmaurice's amendment because there seems to be some differences in how this has been portrayed. If the Minister is saying categorically it does not apply to farmland yet that is not reflected in how it is worded, it is something the Minister needs to clarify tonight. If it is a case that we need to put something into the resolution along the lines of Deputy Fitzmaurice's proposal then we will certainly support it. I am interested in hearing the Minister's analysis of that.

Amendment No. 2 proposes changing the timeframe from midnight tonight to 31 December 2017. Will the Minister comment on that because it will have an impact on the proposed revenue which could potentially be raised? What will the implications of that amendment be on the financial resolution?

Robert Troy (Longford-Westmeath, Fianna Fail)
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Following on from the issue my colleague raised earlier, I want to add my voice to the concern that we intend to fund many of the increases announced in the budget from stamp duty. As Deputy Calleary has said, the Minister was one of the people who advocated against funding day-to-day expenditure through stamp duty, which is a tax that is not guaranteed. It is transaction based so there is no guarantee of a continuous stream of funding. What assessment was done? What are the projected figures for 2018 based on? How were they assessed? Is the Minister confident those figures will be reached? In the event they are not reached, what plans does the Government have to fill the potential shortfall?

The Minister referred to the transitional period. With regard to people who have purchased commercial property through auctions and have paid their deposit, are those transactions covered under transactional payment? Does it apply to anybody who has exchanged contracts to date? The Minister also referred to the potential for a refund for people who have purchased commercial property and seek permission to convert it to residential property. Will there be a refund system and if so, will the Minister enlighten us as to what it will be?

Bernard Durkan (Kildare North, Fine Gael)
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I note the points raised by a number of Deputies about how it might apply to agricultural farmland. My understanding was it did not apply to agricultural farmland but the points raised are valid enough to require that it be double checked.

It might well affect in a negative way the transfer of agricultural land which we would not want.

I ask the Minister to take note of something I have come across in the past. It relates to the timing of the contract, the signing of the contract and the discharging of the contract, which in some cases did not take place leaving the person disposing of the property with a very substantial bill and never getting the benefit of the sale of the property. In the course of the Finance Bill or maybe by way of examining the conditions under which this would apply, it might be possible to review the experience in the past and consider if any of the regulations need to be changed with particular reference to the contract and its efficacy.

Pat Gallagher (Donegal, Fianna Fail)
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Five Members are offering, Deputies Danny Healy-Rae, Catherine Murphy, Mattie McGrath, Breathnach and Fitzpatrick. I ask them to take into consideration that the Minister should be given at least five minutes to respond.

Danny Healy-Rae (Kerry, Independent)
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I am against this increase. If the Government is going to take €376 million it has to come from somewhere but I am afraid this may hurt farmers buying land. We need to get clarity on that because differing stories are coming out. Will it hurt small builders who are buying land to build commercial premises? It could be the difference in them not going ahead. Likewise, will it adversely affect transfers from farmers to sons?

The Minister has suggested that people will incur a surcharge or a fine for not building on land. If they do not build, who will decide that person A or person B should build? How will that decision be reached?

In many cases in our county land has been zoned for housing but the landowners had no notion of using the land for building at any time. It then cost them when transferring to their sons. There are many issues here that need to be resolved. I am all for zoning and I do not think there should be any restrictions. If a local authority decides only to allow building on one side of a town, it gives a monopoly to the developer on that side of the town and he can charge what he likes. There should be no restrictions on zoning land because the market should decide where houses should be built and how many should be built.

Catherine Murphy (Kildare North, Social Democrats)
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The proposal is reasonably sensible and we will support it. I have a number of questions. I am also confused about the land. In his contribution, the Minister may well have said something about leases on agricultural land; I am not sure if I picked that up correctly. For example, what is calculated as being the likely refunds? Has a calculation been done on the cohort of land that would end up in residential use?

Regarding Deputy Fitzmaurice's amendment, if agricultural land is included, what costs are included? What are the estimates in that regard?

We all know there is a housing crisis and we need to increase supply. Affordable housing is part of that. The Government is relying almost exclusively on the private sector to supply that. Is there any proposal for a sunset clause setting a future point in time that could be used as another factor in trying to get this land into use quickly? Without that, this is an open-ended arrangement for a particular cohort of people who have been hoarding land. It is important to indicate that if it is not used, there is a sunset clause.

Mattie McGrath (Tipperary, Independent)
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Further to what Deputy Calleary said, I am also concerned about reliance on stamp duty slipping back in here again. We saw how it was very fruitful for a long time in the crazy times. When transactions ceased, very little came in from it. It is a very shaky foundation. The Minister gave an estimate of in excess of €370 million. I support Deputy Fitzmaurice's amendment because I am also concerned that it would apply to farmland. A farmer seeking to extend his holding could be penalised here.

It is proposed to be effective from tonight. I want a kind of sunset clause, a waiting time. I will see if Deputy Fitzmaurice does as well with his next amendment

As was said during the debate on the Budget Statement, I do not know why the Minister is afraid to tax some sacred cows. Here we are with an imponderable - a case of dúirt bean liom go ndúirt bean léi go raibh fear i dTiobraid Árann a bhfuil póca ina léine aige. We do not know what this will achieve.

I had this in my submission for the past number of years. Why did the Government not impose a land tax on landholders who are acquiring thousands upon thousands of acres? In my county a certain racing conglomerate cannot be stopped. The Government had a chance to do something on the fees for stallions - a very good initiative introduced by Charlie Haughey all those years ago when it was needed. Now we have an excellent equine industry and I am proud of it. We do not need them buying all the land without incurring any tax. I asked for a tax to be imposed on farmers with more than 750 acres. No small farmer or family farm has that kind of acreage.

Pat Gallagher (Donegal, Fianna Fail)
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I ask the Deputy to conclude.

Mattie McGrath (Tipperary, Independent)
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I will, a Leas-Cheann Comhairle.

Here is a cash-rich sacred cow that the Government refuses to touch. It could be done on the basis of acres above the limit. It would not stifle anyone buying commercial premises to develop for residential or commercial purposes. It would not create uncertainty. Auctioneers are concerned about it, as we all are. The Minister is not definite - no more than I am - that it will return the kind of money projected. These fat cats seem to be sacred cows that cannot be touched and the Government will not touch them. Other big parties will not touch them either.

Pat Gallagher (Donegal, Fianna Fail)
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I call Deputy Breathnach.

Mattie McGrath (Tipperary, Independent)
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We are back to the old landlord days where people can amass up to 15,000 acres of land with no small farmer and no community. No football or hurling team will be fielded. No schools will be filled because they will be locked up and fenced as if it was in Nazi Germany; a snipe would not get through the fences. There are rich pickings there but the Government refused to touch it.

Pat Gallagher (Donegal, Fianna Fail)
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I want to give the Minister an opportunity to respond. I call Deputy Breathnach followed by Deputy Fitzpatrick.

Declan Breathnach (Louth, Fianna Fail)
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It is clear that the stamp duty collection is a shaky cornerstone of this budget. I reiterate what others in the House have said that any developing farm or expanding farm should be exempt from the increase in stamp duty. The Minister needs to clarify the various messages and signals that are coming out, which do not seem to be ad idemwith what appears in the document before us.

Pat Gallagher (Donegal, Fianna Fail)
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I call Deputy Fitzpatrick and ask him to bear in mind that I want to give the Minister at least five minutes.

Peter Fitzpatrick (Louth, Fine Gael)
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I know that the stamp duty on commercial property transactions was 9% between 2002 and 2008. I have concerns about small businesses. I wonder what kind of damage increasing the stamp duty from 2% to 6% will do. As a former businessman, I remember buying a business years ago. The good thing about a small businessperson buying his or her own property is that it means that he or she is not worried about hikes in rent and everything else. We must not forget that the SMEs have played a major part in the recovery of the economy. Multinational companies can afford to pay an increase, but that is not the case for SMEs and the farming community.

Is there any way that we can help these small and medium enterprises with stamp duty?

Michael Fitzmaurice (Roscommon-Galway, Independent)
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I have one final note. I will not take long. When the Minister spoke earlier, he outlined that there were exemptions for young farmers. A young farmer is a farmer under 40 years of age. That is the definition of a young farmer. He also, quite rightly, outlined that there would be exemptions for transfers from parents, aunts and uncles. That is correct. I am solely speaking about a person who buys ten acres of land down the road beside him or her. There is nothing to clarify that situation today. That is the problem. That is where there is ambiguity.

Richard Bruton (Dublin Bay North, Fine Gael)
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I thank the Deputies for their contributions to the debate. To make the sort of change which Deputy Fitzmaurice is proposing would require state aid approval. Setting a new effective date of 31 December would also create a very substantial disturbance in the housing market. This is something which is coming in tonight and on which we are voting tonight in order that the market can be clear on our approach and in order that artificial transactions will not occur as a result of timing issues. The provisions are very clear. They provide a number of very substantial reliefs for farm land. They include the case of the young farmer and the case of a person related by consanguinity. This concept goes quite far out and includes lineal descendants and so on. It essentially includes anyone in the wider family who would continue to farm the land. There is also a refund should the land be disposed of and used for housing. This must be weighed against the many other farming measures which are in place. While some farmers will pay the 6% if they choose to extend their holdings by purchasing land in circumstances other than those I have outlined, on the other hand substantial investment is being put in to strengthen the position of farming, particularly in light of the pressures which are coming from Brexit. It is important that this is one of the measures. It will largely be funded from the commercial property sector, which is being used to fund many much-needed changes, not least in our rural communities. It is worth recalling that back in 2008, stamp duty of 9% applied.

Turning to the point which Deputy Calleary raised on whether we are building on an unsustainable base, I do not believe that is the case at all. The present stamp duty raises €400 million in this area. This change would add another €376 million. There is a strong pipeline of commercial property building and activity. The Revenue Commissioners are very confident that there is a healthy demand and, if anything, an excessive supply. There is 10% of further office space in the pipeline. There is a strong pipeline.

On the issue of whether we should be relying on a transactional tax, this is very different from the situation that prevailed back in 2007 when stamp duty was raising 8.2% of total tax revenue. In addition, a further 15% was being raised from various taxes on the 90,000 houses which were being built. We had a situation whereby nearly 20% of tax revenue was coming from the property and housing sector. That is not the case here. The sum total of this additional revenue will represent less than 1% of total tax revenue. It is a very different situation. This is being done in the context of the need to encourage switching of use to unlock land for housing. This is not the only measure with that aim. Some €750 million of funding from the Ireland Strategic Investment Fund, ISIF, will be used to fund new builds. There is also €75 million going into infrastructural investment. The capital gains tax relief is also specifically intended to release land for housing. The circumstances are very different and this is an appropriate measure to introduce at this time.

I acknowledge Sinn Féin's support for this measure. I did read its pre-budget submission. This is an appropriate measure in the circumstances we are in. As I said, an effective date of 31 December would create uncertainty in the market. The details of the transition arrangements will be worked out in the Finance Bill. There will be ample opportunity for debate on the details of that Bill, including consideration of Deputy Catherine Murphy's point on whether this refund for converting such lands to housing should have a sunset clause. It is clearly the Minister's intention that we maintain balance in our property market. He is intervening at a point when one segment of the property market is very strong and at risk of overheating, while another is depressed and needs to respond. He will be very conscious of that.

Deputy Mattie McGrath has raised a concern about excessive accumulation of very large holdings by individuals. This tax would certainly discourage that in that it would be chargeable on any such accumulation. Deputy Fitzpatrick raised the issue of whether this would affect small business. It would affect small businesses in the event that they were selling their business or a big property element of it, but the sort of small business which we really need to invest in is the sort which creates enterprise and employment rather than the sort involved in the selling of a business or a particular piece of property. The budget leans towards supporting those small businesses with the €300 million fund for loans at 4%. Getting access to those funds will be a real boost for small businesses. Many of those businesses are trying to trade online. The Minister, Deputy Naughten, announced improvements in supports for businesses seeking to trade online. There are many microelements of the budget which seek to support small business. I commend this motion to the House.

Danny Healy-Rae (Kerry, Independent)
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On a point of order, a Leas-Cheann Comhairle.

Pat Gallagher (Donegal, Fianna Fail)
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Under what Standing Order is the Deputy making a point of order?

Danny Healy-Rae (Kerry, Independent)
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Under the Standing Order that the Minister said that it would affect a small businessman if he was selling.

Pat Gallagher (Donegal, Fianna Fail)
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Wait now.

Danny Healy-Rae (Kerry, Independent)
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It is the purchaser who will pay the stamp duty, is it not?

Pat Gallagher (Donegal, Fianna Fail)
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I must comply with the Order of Business, which is that we complete the debate within 30 minutes.

Mattie McGrath (Tipperary, Independent)
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Will the Minister clarify that?

Pat Gallagher (Donegal, Fianna Fail)
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No, he cannot.