Seanad debates

Wednesday, 29 November 2006

5:00 pm

Photo of Brian HayesBrian Hayes (Fine Gael)

There is no comfort for them in this pathetic amendment.

I welcome the interest the Progressive Democrats has shown in this area. However, as Senator John Paul Phelan pointed doubt, after five years in Government it has done nothing in the area. The only change in the stamp duty regime was a paltry change for first-time buyers last year when the exemption limit was raised slightly. The Fine Gael Party had argued for this in three previous budget submissions. In many towns and cities, particularly the Dublin area, people buying average-priced houses must pay up to €70,000 on stamp duty. It is hurting hard and makes a difference in people's ability to buy a house.

The Tánaiste and Minister for Justice, Equality and Law Reform broke from collective Cabinet responsibility in September yet still there is no official Progressive Democrats stance on this, only a vague notion. The Government, at sixes and sevens on the issue due to his remarks, needs to get its act together.

It will make a difference. Politicians tampering with stamp duty may only have the effect of raising house prices again. There is some evidence that the Dublin auction market has stalled since the Tánaiste made his Homer Simpson-like remarks. Many people have told me they will not buy or sell until the matter of stamp duty is clarified in the upcoming budget. The most unpopular leader in politics makes his remarks and the housing market goes at a neutral pace for four months while we wait and see what crumb of comfort he can get in the budget. That is an astonishing act of collective responsibility by the Government.

It is still a ridiculous proposition for the Government to argue that first-time buyers should pay stamp duty at 3% on the price of a property over €317,500. There is a good case for the abolition of stamp duty for first-time buyers of both new and second-hand properties, particularly as 10% of the cost of a property, in some cases up to €50,000, must come put up-front. If the house is over the value of €317,500, already a low price for a house in Dublin, a first-time buyer will be hammered with stamp duty. There is a good case to be made for the abolition of stamp duty for first-time buyers because of the particular difficulties they face in the housing market. My party has long held the view that there is also a good case for older people in large houses who want to trade down. Some choose not to sell because they do not want to pay tax but might do so if they were not charged stamp duty. The Government should consider this because it would free up more four or five bedroom houses in which people in their sixties may be living alone or with partners. That is a sensible and socially desirable action which could have the effect of releasing more large houses onto the urban market.

A bigger problem is the time when people must pay stamp duty. It is outrageous that as soon as the price of one's property reaches a certain level one is levied at that rate for the entire cost of the property. By contrast in Britain there are two rates, applying above and below a certain price level. People here decide not to trade up because of the significant tax that will be imposed if they choose to further themselves and their families by buying a bigger house. The Tánaiste claims we do not need the almost €3 billion raised by this duty. Why then do we not use it in a way that would make a difference as some of these proposals do?

This Government and its predecessor have made some pathetic interventions in the past nine years that have made no difference to the housing market, except by their ineptitude which has made the situation worse. What difference did that great guru, Dr. Bacon, make with all his famous reports connected to the economic doctrine of Fianna Fáil?

I hope the Government takes the opportunity of next week's budget to do something in a sparing and sensible way that makes a difference as against increasing the price of property even more. The Tánaiste will then hopefully learn the lesson of his rant and rather silly remarks last September and those to which he should have listened sooner.

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