Brian Cowen (Laois-Offaly, Fianna Fail)

These are the facts. It is Senator Phelan's problem if he does not wish to hear them. The Opposition thought this would be a vote winner but it did not work out that way. The reason is that the scattered approach it had would reflate house prices and the benefit would go not to purchasers but to sellers. That was the basic problem. If it was the case that under the stamp duty regime in force, one had authority from one's financial institution to buy a house for €350,000 or €400,000, and if as a result of the Opposition's prospective proposals, €20,000 more was taken out by paying €10,000 or €15,000 less, the purchaser would have made a simple calculation of the market. His price would have gone from €350,000 to €365,000. This was a situation where the seller got the benefit, the Exchequer lost, house prices increased and nothing was done on the affordability question.

When this ill-thought out issue was brought forward, the Opposition said it would improve the stamp duty regime over three years until it got to its final position after three years. That was the proposal launched by Fine Gael and adopted by the Labour Party. Within three or four weeks, they were scampering back to find out what they would do about the basic question of how to bring forward a so-called initiative which got better for the prospective purchaser the longer they stayed out of the market. That was the logical outcome of having a determinate period of three years in which to deal with the issue. I am sure the intention was good and that Fine Gael believed in it. The party argued for it. Those are the facts of the matter as I saw them. With respect, I believe people saw the logic of that argument. The reason I critiqued it so vociferously is that I believed it was the wrong thing to do at a time when the correction was taking place.

This episode pointed up a bigger issue that we need to consider for the future. In our democratic debate it is open to anybody to speak about the need to reform this, that or the other tax as they see fit in general terms. When one argues for stamp duty and capital taxes outside of the budgetary context and cycle, there is speculation and people's behaviour changes on the basis of an expectation of change. The reason we deal with these matters within a budgetary context is that a Minister for Finance can initiate the reform, put forward a financial resolution to the House by midnight and have a new regime in place by the following morning.