I wish to give notice to the Minister of State that I may conclude my contribution before 7 p.m. and he may be obliged to reply to the debate.
Stamp Duties Consolidation Bill, 1999: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time."
That is fine.
This consolidation Bill has been referred to the draftsman's office and certified by the Attorney General's office as not involving a change in law. Consequently, we are simply looking at a modern vehicle in which the law relating to stamp duty will be consolidated. Issues of a policy nature do not arise from this Bill and, consequently, I do not intend to spend too long on it.
In his speech last night the Minister kindly gave a full review of the imposition of stamp duty under statute, from the time it was first introduced as a temporary measure in 1774, 225 years ago, when 47 different types of document were subject to stamp duty, right up to the introduction of this Bill to consolidate extant stamp duty law.
It is interesting that it was introduced as a temporary measure 225 years ago. In the early days of this century, income tax was also introduced as a temporary measure. It seems many taxes are introduced as a temporary expedient and then become a permanent fixture in financial legislation. I presume it was a coincidence that it was introduced the year before the American War of Independence. Perhaps it had something to do with funding the imperial war against the rebels in the United States which everyone knew was going to occur by mid-1774.
The main legislation in Ireland dates from two key Acts of 1891. It is curious that while there have been modifications in the law affecting stamp duty since then, many of the amendments have been introduced by way of individual Finance Acts, rather than through amendments to stamp duty. The main extension took place in 1981 when the Finance Act imposed a levy on credit cards and charge cards. Around that time stamp duty on transactions was introduced for the first time.
It is interesting that information technology obliges the Revenue Commissioners to adapt themselves. I welcome the modernisation of the stamps themselves, in their design and through the use of holograms, as signalled in the Minister's speech. I welcome the fact that in the process which led to the drafting of this Act, great pains were taken to consult all expert interested parties, from the Institute of Taxation to the Incorporated Law Society. Two referees were appointed to ensure nothing extraneous was included in the legislation by mistake. The procedures adopted in the Tax Consolidation Bill were appropriate and effective and I am glad to see them being adopted here also.
I have only one policy related item to raise – the incidence of stamp duty as it applies to residential property. It is set out clearly in the Schedule. This is not an appropriate vehicle for introd ucing change but the Minister might have a look at the incidence of stamp duty on residential property in his budget.
Many people are under the illusion that the first £60,000 of value of a residence is exempt from stamp duty. That is not the position. A residence, including its contents up to £60,000, is exempt from stamp duty, but once the value of a residence and its contents exceeds £60,000, like a number of other taxes and levies, the stamp duty applies from the first pound. In any residence worth up to £100,000, stamp duty applies at 3% from the first pound. Even in my city it is difficult to find a residence which would be valued at less than £60,000. One would search long and hard in Dublin before one could avail of the stamp duty exemption on a residence of less than £60,000.
As in inheritance tax, and capital acquisitions tax as a whole, this exemption limit has been made redundant by the huge increases in property prices, including residential property prices. I call on the Minister for Finance to review this exemption limit. As a first step, he might change it to say that the first £60,000 of any residential property will be exempt from stamp duty. That would be a welcome step. It would give the boost that many young people buying second hand homes need. Then, if a starter home cost in the region of £140,000, they would be satisfied that the first £60,000 would be exempt from stamp duty.
There is a case to be made now that the whole schedule of percentages applying to residential properties should be reviewed. The Minister for Finance should consider this when he introduces his budget on 1 December and put such a review into effect when the Finance Bill is brought before the House in the spring.
I compliment all those involved in the Bill. There are other items of a technical or policy nature which I intend to raise on Committee Stage but the Fine Gael Party is happy to agree with the Bill and give it a free run through the House. We will not delay it on Committee Stage either.
I appreciate the effort of the Revenue Commissioners and the parliamentary draftsmen in putting this Bill together in such a simple and accessible format. I congratulate the Revenue Commissioners on the extensive work they have done in tidying up the whole area of stamp duty. They did the same in the Taxes Consolidation Act two years ago. It shows that we have experts working in that area and I applaud them.
The Revenue Commissioners have stated that they will provide extensive guidance notes on this Bill. The Revenue Commissioners have the best of all Government websites and I am sure those notes and the Bill will form part of that informative website.
The consolidation of stamp duty legislation is a boon for the tax practitioners and solicitors who use it. It is great that the archaic language which has been part of stamp duty Acts in the past has been modernised. The Institute of Taxation has nothing but praise for the work which has been done by the Revenue Commissioners on this matter.
As Deputy Noonan said, this is not the time to change stamp duty, but it is time to flag changes which might be welcome in future. I would like to see the question of stamp duty on the incorporation of a business addressed so an interest in a business could succeed from parent to child and the child could be given a degree of ownership. If that could be done without a levy of 1% on the assets, it would be very valuable.
In Germany, Holland, Luxembourg, Finland and Spain there is 0% stamp duty on the transfer of shares. In Britain the rate is only 0.5% and that may be abolished. By doing away with the 1% charge on share transfers, it would allow for a better rate of transfer and would open up the market for shares.
Debate adjourned.