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Just a Thought on the Fine Gael Stamp Duty Proposals
Read more about: Fine Gael, Housing, Irish Election, Irish Politics, Labour Party, Progressive Democrats, Taxation
While the proposal itself is no doubt well known at this stage*, there is a throw away line by Mark Hennessy in today’s Irish Times that should probably concern voters slightly.
“In addition, the profile it hopes to gain will rebalance the relationship between Fine Gael and Labour, who scored significantly when Labour Party leader Pat Rabbitte announced major tax cut plans last month.”
Supporters of the alternative government would have hoped that there was a dominant spirit of solidarity rather than one of competition in and among the camps, given that the talk from pundits is of FG and Labour fighting each other for seats as well as fighting FF. Its a small point but nonetheless it points up how hard it is (and how much harder it is likely to get once we get into the final 30 days of an election) to hold the camps together.
*Taking from Enda Kenny’s press release (John Minihan reckons they cogged the PDs) the core aspects of the policy are (with costing appendices);
1. A €1,000 increase in the tax credit for people working in the home caring for children or elderly relatives;
2. A €5,000 increase in the standard rate tax band for families, which will benefit 400,000 families in total including 92,000 one income families;
3. Effectively abolishing stamp duty for first-time buyers (FTBs) by raising the exemption limit for FTBs of second hand homes to €450,000;
4. Simplifying stamp duty rates by reducing the number of rates from 7 to 3. The new rates will be 0%, 5% and 9%;
5. Making stamp duty fairer so that you only pay the higher rate on the portion of the price over each threshold and not on the entire purchase price. Under Fine Gael’s proposals, the first €100,000 is zero rated, the next €350,000 is paid at 5% and the balance is charged at 9%. This means that major savings are made on stamp duty costs at each house price level.
Cian, that is the interpretation that Hennessey is putting on the thing and the rebalance is only in the press attention that the parties are getting. I’m not aware of any Labour candidates who aren’t campaigning 100% irrespective of what FGer is going forward in their area.
I thought that myelf dan but it struck me that the journalist is equally likely to get something like that from a spin machine. Perhaps not, but it is worth noting and keeping an eye on none the less.
Stamp Duty, like Income Tax and VAT is a lazy tax; as Colbert said “the greatest amount of feathers for the least noise” (and I’m sure I will be corrected - again - for misquoting)
Nonetheless, Stamp Duty should be abolished and replaced by a tax on the increase, if any, on the site value.
The house valuation is that which Insurance companies use for fire - viz. Compensation for Reinstatement. If the house is the Principal Private Residence (PPR) no tax of any sort should be levied. It should be assumed that any increase in value is opportunistic and it is this element of the selling price that should taxed.
By the same token, Legal and Estate Agent fees should be calculated on the house value, not the sit.
Which leaves tax to be collected on second (holiday) houses; fallow property (empty houses being assembled for destruction by developers); land banks; fallow farm land; and any other unproductive assets etc. - as an alternative source to compensate for the loss of Stamp Duty.
Call it any name you like.
Developers; Farmers and the visitors to the Fianna Fail tent at the Galway Races are bound to hate it and call in the “favours” contingent on their “donations” - over the lifetime of the Party - to Fianna Fail - to ensure that there is no reform that affects their “special interests”.