Jim O'Keeffe (Cork South West, Fine Gael)
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Question 130: To ask the Tánaiste and Minister for Finance his views on whether in many instances the present stamp duty system places an unjust burden on those who are purchasing homes; and if he has proposals to reform same. [23464/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Finance (No. 2) Act 2007 introduced an exemption from stamp duty for first-time buyers in accordance with the commitments made in the Programme for Government to bring about immediate change to the stamp duty regime for first-time buyers. It is considered that the changes brought about a positive impact upon the ability of first-time buyers to purchase a house. In relation to other purchasers, who are not first-time buyers, they generally enter the market with a build up of equity which reflects their previous home-ownership. This enables them to enter the market at a higher level than first-time buyers.

It should be noted that, in real terms since 1997, a person on the average industrial wage will have seen their take-home pay rise by 42%, about half of which is due to reductions in taxation. In International terms, Ireland has the lowest tax wedge in Europe for the single worker on average earnings; this has been the case in each of the years over the 2000-2006 period. This improvement in disposable income has undoubtedly helped people purchase houses regardless of whether they are first-time buyers or existing home owners.

In Budget 2007, the ceiling for mortgage interest relief for first-time buyers was doubled from €4,000 to €8,000 for single persons and from €8,000 to €16,000 for couples or widowed persons. This means that mortgage holders may receive extra relief of up to €66 per month, if single, or €133 per month, if married or widowed, subject to paying sufficient mortgage interest to avail of the relief. It was estimated at Budget time that in the region of 125,000 individuals who were first time buyers for mortgage interest relief purposes would benefit from the increased level of relief. I might also mention that the ceiling for mortgage interest relief for non first-time buyers was increased from €2,540 to €3,000 for single persons and from €5,080 to €3,000 for couples or widowed persons.

Looking ahead, people will be aware of our commitment, contained in the Government Programme, to increase in Budget 2008 the ceiling on mortgage interest relief for first-time buyers and first-time buyers who bought a house in the past seven years, from €8,000 to €10,000 for single people and from €16,000 to €20,000 for couples or widowed persons. In addition, as income taxes are reduced, we are committed to keeping the rate of mortgage interest relief at 20% for all home owners. These commitments were made alongside the commitment to immediately abolish stamp duty for all first-time buyers which has already been implemented.

These measures underpin the Government's solid support for first time buyers who may have extended themselves relative to their incomes to buy a first home.