Friday, 30 April 2021
Nithe i dtosach suíonna - Commencement Matters
I thank the Minister of State for coming in to speak about this important subject. The Minister of State will be aware of the current rates of stamp duty being charged on the purchase of homes in Ireland. We are aware also that there is a significant shortage of housing which accounts for the rise in property prices in recent months and years. Stamp duty is, in real terms, a tax on mobility. It stops people from moving house because it creates an additional expense on buying a house and moving to a new house and indeed selling another house. I want the Minister of State to consider that at a time when property is so expensive, particularly in the capital, perhaps the time has come to consider removing stamp duty altogether. I am aware this has been considered in the past and that it would leave a hole in the Exchequer accounts, there is no doubt about that. However, at a time when we have rolled out local property tax, ostensibly with a view to funding local authority activities throughout the country, it seems like double taxation that people must pay a tax at the time they move into or buy their home and they must thereafter pay an annual tax related to local authority activities. One tax for both would suffice.
At the moment, property tax is calculated at 1% of the purchase price under €1 million and 2% on every €1 of the price over €1 million. It may well be that people look at this debate and think that anybody who can afford a house at that level is doing well enough that he or she can pay the tax. However, the reality is that in places like Dún Laoghaire, where I am from, it is very difficult to find houses for below €500,000. Therefore, even a first-time buyer or new buyer coming into the market will pay €5,000 stamp duty on top of the very substantial expense connected with moving house. We should not be saying to people that, first, it is acceptable to tax them on the double given the local property tax and, second, and perhaps more importantly, we think it is acceptable for the State to stymie their mobility. We should be encouraging people to move as much or as often as they want to because it is exactly the kind of thing that will free up properties for use in a more appropriate fashion. An example of this would be somebody who is living in the former family home which is too big for him or her, or more likely a couple who live in a one-bedroom apartment who now have a child or two and want to move out. The latter is very common in the Dublin area. The expense of moving to that other property is very significant. That tax on mobility means we do not use the housing stock we have as effectively as we could. It equally applies to people who want to downsize into a smaller home, perhaps a retired couple who no longer have a need for a large house. We should be encouraging people to use property as effectively as possible and remove this tax on mobility.
I am aware this issue has already been addressed today but in the same regard, inheritance tax as currently set is a massive impediment for people. The entrance level is less advantageous than it was in 2009. Then, there was a band for children of €542,000 before they had to pay inheritance tax on, very often, the family home. That is now down to just €335,000, although I acknowledge it has been creeping up it is still very low, particularly when one is dealing with Dublin house prices. Again, there may be little sympathy around the country for that situation. However, that is the reality for people who live in Dublin where houses are expensive and when a parent dies, inheriting a family home very often brings with it the inability to keep that family home and it must be sold because the inheritance tax cannot be paid. The State should be cognisant of that and raise that band to allow people to hold on to family homes which might well be suitable for a younger family but which may also have huge sentimental value to the inheritors.
I ask the Minister of State to consider reducing these taxes on mobility and making them fairer in the context of people wanting to move house or move within their area.