Derek McDowell (Labour)

I do not support wholesale across-the-board reductions in stamp duty. I am proud to be a tax-and-spend social democrat. In order to improve social services we need to spend public money. To pretend that we could greatly reduce the rates of stamp duty would be hypocrisy on my part. In the context of the housing market, an overall reduction putting extra money in everybody's pockets would be a very serious mistake. If we give people greater capacity to bid up the price, they will bid the price up to the benefit of developers. Therefore we cannot do this in an across-the-board fashion. In fairness the motion does not ask us to do that and therefore we can support it. The motion specifically asks for assistance for first-time buyers. Nobody in either House would dispute that first-time buyers are finding it pretty difficult as matters stand.

I used to represent a part of Dublin where the problem is particularly acute — a part of Dublin with which Senator Mansergh has a greater acquaintance than he had some time ago. I believe I met someone known to him in my locality. It is now virtually impossible for anybody born and living in Dublin North-Central to stay there and buy a house of their own unless they earn approximately three times the average industrial wage. Not many people seeking to buy their first house earn such money. While it is possible to buy some apartments, very few of those are available. As a result large numbers of young people from my part of the city are required to go to the commuter counties of Kildare, Meath, Westmeath and Louth.

Some interesting academic research shows that many of them are quite happy when they get there. They put down roots, and their children go to school and happily grow up in Ratoath, Ashbourne and other places. However, considerable research suggests that some of them are anything but happy. They are displaced from family and friends. They are involved in long commutes to work and to social settings to meet their friends. They leave dormitory towns where virtually nothing happens during the day and they hate it. This is causing real social resentment among people I meet on a day-to-day basis. I am sure other Members of the House have had similar experiences. We need to do something to assist those people in particular to get into the housing market and buy their first houses.

I do not agree with the CIF proposal to exempt all houses for first-time buyers, which would be ludicrous. Those in a position to spend €500,000 on a house are in a position to pay some stamp duty. However, scope clearly exists to increase the thresholds or to take a number of other measures, some of which have been outlined by my party's finance spokesperson in the other House, Deputy Burton, in recent days. The measures must be targeted specifically at first-time buyers.

I wish to make some points that others have not made. There are abuses in the stamp duty regime, avoidance measures being taken by developers in particular, which must be drummed out. I mention two such measures. There is a scam whereby developers, without taking legal title to the property, effectively procure a conveyance of land straight from the landowner to the house purchaser. They do this in effect by getting a licence to build rather than taking conveyance of the land. The result is that the developer, who in effect is the beneficial owner of a property worth many millions of euro, is paying no stamp duty on it. I know the Minister has undertaken to review the issue and we need a result fairly quickly.

Another scam is one whereby rather than transferring the land, in effect the shares of a company that owns the land are transferred and capital duty at 1% is paid rather than stamp duty at 9%. Although this scam is not widely known, it is of a kind that causes enormous resentment. Ordinary purchasers are required to pay 9% on properties worth more than €635,000 and large companies, developers or wealthy individuals pay nothing or perhaps 1% on properties worth many millions of euro. It is a classic example of one law for the rich and one law for the not so rich. I hope the Minister is seriously considering these abuses and will rectify them.

My party's spokesperson on the environment in the other House is committed to doing something on mortgage interest relief in the event that we are in a position to do so. An argument exists in favour of giving a particular benefit to first-time buyers. I am not in favour of an overall increase in mortgage interest relief for everybody, as it would not help greatly. However, we should benefit first-time buyers in particular, perhaps by permitting them to get mortgage interest relief on all their borrowings and giving relief at the higher rate of tax for everyone concerned.

While my party has no proposal on the matter, as someone who used to act as a conveyancer on occasion and still does the odd bit, I am conscious that the band system is inequitable, as all other speakers have said. In the longer term it needs to be reviewed. I do not suggest that we should reduce the income to the State in doing so. Owing to the jamming effects it has on the market at the pinch points, it should be reformed in any event.

The motion also mentions trading down. I am at risk of what Senator Ross would call waffling. I can see both sides of the argument. Plenty of people living in my part of the city are sitting on properties that are worth a considerable amount of money and in most cases, I suspect, they are mortgage free. It would be desirable for them to dispose of those properties and move to smaller properties. However, I have some sympathy with the view articulated by Senator Mansergh that there is little evidence that the stamp duty liability is stopping them from moving. I suspect that in many cases they are staying in their own home because they think of it as their home as it has been for 50 years and they do not particularly want to move. I am not persuaded — although I could be persuaded if my Fine Gael colleagues could manage it — that we should move on that issue. My instinctive reaction is the same as that of Senator Mansergh. I am not sure the blockage is where it is suggested. However, I am open to be persuaded by Fine Gael colleagues in that regard.