Margaret Cox (Independent)

I proposed an amendment to the Order of Business indicating that legislation such as this is important enough to warrant more time for scrutiny in the House. Many Ministers have entered this House and have listened to Senators on various Bills but it is very difficult for Senators to address Second Stage, Committee Stage and Report Stage all in one go. It presents great difficulties for us and disregards the importance of the House. I am in a position to say this because I am not returning to the House. It is not therefore a question of my talking myself up; I am referring to the importance of the House and of allowing sufficient time to address legislation therein in order to ensure it is the best possible legislation for the country. This is the overriding objective of bringing any legislation to the House.

On the recommendations to the Finance (No. 2) Bill, reference was made by Senator O'Toole to backdating the period to which the legislation applies. I have said to the Minister previously that stamp duty on the family home is a tax on the family. It should not be levied on any family home. Not only should it be abolished for first-time buyers of new or second-hand houses, an initiative I recognise and welcome, it should also be abolished in respect of the purchase of all family homes.

As families move from one house to another, as they often do, they must pay stamp duty. A family's first house may cost €400,000, thus incurring a stamp duty liability of €30,000. If that taxpaying family, because of improved financial circumstances or employment prospects, or on foot of having more children, moves to a slightly bigger house of three or four bedrooms, costing €550,000, it must then pay stamp duty of €41,250. If it later moves to another house, perhaps with a view to downsizing, it must pay stamp duty yet again. If, for example, it moves into a four-bedroom house in a very ordinary, nice area of Galway, as are all its areas, it must pay an average of €690,000, incurring stamp duty of €62,100. This liability will not change under the Bill. I refer to average house prices outside Dublin and am therefore not referring to houses in Dublin 4, which could cost €1.5 million. I am talking about ordinary, everyday houses and ordinary, everyday families. All the transactions to which I refer involve a change to another family home rather than participation in the investment market, even though first-time buyer's relief may have been availed of in respect of a new development.

In every housing cycle, people who upgrade or move on often make a contribution in respect of those at the bottom of the ladder buying their first house. This was evident in the housing market in the United Kingdom many years ago and even in Ireland at times. My focus is always on the family and those trading up for family reasons. Such families may be liable for stamp duty of €133,250. I will not be a Member of this House when the Minister is presenting the next Finance Bill but I ask him to consider the question of stamp duty being imposed on the family home. There should be no stamp duty paid where a person buys a replacement house before selling the original house but then completes the sale as that person then has one primary residence on which no stamp duty should be paid.

The Minister said there was no need for such a proposal as the majority of houses are not in the upper echelons of prices at €4 million or €5 million. I do not see the need for a cap because this restricts the market. A family home should be defined as being for the use of a family. The Constitution protects the position of the family and is built on the values of the family. If there is to be any value in society, then the family must be protected and the most important possession for any family is a roof over its head.

The Minister may be concerned that removal of stamp duty from the family home might lead to an increase in house prices. Senator O'Toole made the point that the market now decides the price of houses. There has been a softening in the housing market in the past six to 18 months which has been caused by a softening in demand and as a result of higher interest rates. Every 0.25% added to interest rates has an impact on house buying. This is a market economy and it is the market which will decide the price of houses. Therefore, the removal of stamp duty from all family homes will not suddenly inflate the price of every single house. Investors will still be required to pay stamp duty but those genuine family home buyers moving from one family home to another will be exempt.

Another argument put forward against this recommendation is that people trading up a family home are gaining by the increase in the value of the home between the time they bought the house and when they sell it. The problem with such an argument is that due to the softening of the market, such gains are not apparent now compared with the past eight or ten years, when houses rose in price from €300,000 to €600,000 in two years. Such gains are no longer being made. People trading up out of necessity or out of a desire to have a bigger house to suit their family size are continuing to pay additional tax. I ask the Minister to consider accepting this recommendation.

The cost of repayment of the stamp duty would seem to be affordable this year. I suggest repayment should be backdated to 1 January 2007. This would make a significant and unexpected difference to many people who purchased houses in that first quarter of the year and who believed at the time that there would be no change in stamp duty.