Billy Timmins (Wicklow, Fine Gael)
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Question 100: To ask the Minister for Finance his estimate of the tax revenue derived from the housing sector; his estimate of the impact on the Exchequer of a 10,000 rise in the number of new houses built and a 10,000 move in the number of second-hand houses sold. [33176/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Activity in the housing sector impacts primarily on VAT, Stamp duty and Capital gains tax. Housing market activity also impacts on Income tax and PRSI receipts and Corporation tax from construction sector company profits.

VAT at 13.5% is included in the final price of a new house sold to the purchaser. I have been informed by the Revenue Commissioners that the VAT yield from new housing in 2005 was €2,046 million and from the maintenance and repair of all housing in 2005 was €418 million, giving a total figure for VAT from housing in 2005 of €2,464 million.

In the case of Stamp duty, €945 million was collected from residential property transactions in 2005.

In the context of the housing market, Capital gains tax would generally arise on the sale of houses which are not the principal private residences of the sellers. I do not have information at this time regarding the Capital gains tax yield in 2005 which is attributable to activity in the housing sector.

A 10,000 rise in the number of new houses built would boost VAT receipts. The latest Department of the Environment Housing Statistics Bulletin for Q2 2006 puts the average new house price nationally at €308,302. The VAT element would amount to €36,670. If 10,000 extra houses were built this could, all other things being equal, expect to generate around €370 million in VAT. Insofar as a higher level of activity would increase employment in the construction sector there would also be increases in Income tax and social insurance contributions.

In terms of Stamp duty, the additional yield from 10,000 extra new houses being built would depend on whether these new houses were purchased by first-time buyers or by investors. In general, all owner-occupiers would not pay stamp duty on new houses. For investors a rate of 5% would apply to a house purchased for €308,302.

A 10,000 move in the number of second-hand houses sold would primarily have implications for the Stamp duty and Capital gains tax yields. The extent of the impact would depend on a number of issues including whether the number of second-hand house being sold increased or decreased, whether or not the houses being sold were purchased by first-time buyers or by investors and at what price they were being sold.

I am unable to give a precise estimate but the revenue would be likely to exceed €200m on certain reasonable assumptions.