Resolution No. 11.—Stamp Duties.

Mr. Aiken

I move that the Dáil agree with the Committee in Resolution No. 11:

(1) That the stamp duties chargeable on conveyances or transfers of lands, tenements and hereditaments under the heading "Conveyance or transfer on sale of any property" in the First Schedule to the Stamp Act, 1891, as amended by subsequent enactments, shall, on and after the 1st day of December, 1947, be at the rate of two pounds ten shillings for every fifty pounds or fractional part of fifty pounds of the amount or value of the consideration in lieu of the rates immediately theretofore chargeable.

(2) That paragraph (1) of this Resolution shall not apply—

(a) in any case where the amount or value of the consideration does not exceed five hundred pounds and the instrument contains a statement certifying that the transaction thereby effected does not form part of a larger transaction or of a series of transactions, in respect of which the amount or value, or the aggregate amount or value, of the consideration exceeds five hundred pounds;

(b) in any case where the amount or value of the consideration exceeds five hundred pounds but does not exceed one thousand pounds and the instrument contains a statement certifying that the transaction thereby effected does not form part of a larger transaction or of a series of transactions.

(3) That in such case as is mentioned in sub-paragraph (b) of paragraph (2) of this Resolution the duty chargeable shall on and after the 1st day of December, 1947, be as follows:—

Where the amount or value of the consideration for the sale—

£	£
Exceeds 500	and does not exceed 550	£7 10s.
,, 550	,,,,600	£10
,, 600	,,,,650	£15
,, 650	,,,,700	£20
,, 700	,,,,750	£25
,, 750	,,,,800	£30
,, 800	,,,,850	£35
,, 850	,,,,900	£40
,, 900	,,,,950	£45
,, 950	,,,, 1,000	£50

(4) That the foregoing provisions of this Resolution shall have effect if, but only if—

(a) the person who becomes entitled to the entire beneficial interest in the property (or, where more than one person becomes entitled to a beneficial interest therein, each of them) is either—

(i) an Irish citizen,

(ii) a person who is for the time being ordinarily resident in the State and who was ordinarily resident in the State continuously during the three years immediately preceding the 15th day of October, 1947,

(iii) a body corporate incorporated in the State on or before the 15th day of October, 1947,

(iv) a body corporate incorporated outside the State which, on or before the 15th day of October, 1947, has filed with the registrar of companies the documents and particulars mentioned in sub-section (1) of Section 274 of the Companies (Consolidation) Act, 1908,

(v) a person lawfully carrying on a business which comes within the provisions of any paragraph of sub-section (1) of Section 9 of the Control of Manufactures Act, 1934 (No. 36 of 1934), or

(vi) a body corporate incorporated in the State after the 15th day of October, 1947, where the issued shares of each class are, to an extent exceeding one-half (in nominal value) thereof, in the beneficial ownership of persons each of whom is within one of clauses (i) to (v) of this sub-paragraph,

and

(b) the instrument contains a certificate to that effect by the party to whom the property is being conveyed or transferred.

(5) That in any case in which, by virtue of paragraph (4) of this Resolution, the provisions of paragraphs (1), (2) and (3) of this Resolution have no effect, the stamp duties chargeable on conveyances or transfers of lands, tenements and hereditaments under the heading "Conveyance or Transfer on sale of any property" in the First Schedule to the Stamp Act, 1891, as amended by subsequent enactments, shall, on and after the 1st day of December, 1947, be at the rate (in this Resolution referred to as the higher rate) of £25 per cent. of the amount or value of the consideration in lieu of the rates immediately theretofore chargeable.

(6) That this Resolution shall apply to any conveyance or transfer of lands, tenements and hereditaments operating as a voluntary disposition inter vivos, and reference in this Resolution to the amount or value of any consideration shall be construed in relation to duty chargeable on such conveyance or transfer as a reference to the value of the property.

(7) (a) That this paragraph shall apply to every conveyance or transfer of lands, tenements and hereditaments, whether on sale or operating as a voluntary disposition inter vivos, unless the person becoming entitled to the entire beneficial interest in the property, or, where more than one person becomes entitled to a beneficial interest in the property, each of them, is within one of clauses (i) to (vi) of sub-paragraph (a) of paragraph (4) of this Resolution.

(b) That if, at the expiration of 30 days after the execution thereof, a conveyance or transfer to which this paragraph applies is not stamped or is not stamped at the higher rate, a sum equal to twice the amount of the duty at the higher rate shall thereupon be a debt due to the Minister for Finance for the benefit of the Central Fund by the person to whom the property is thereby conveyed or transferred, or in case there is more than one such person, by such persons jointly and severally, and shall be payable to the Revenue Commissioners, and the said sum shall be recoverable at the suit of the Attornery General in any court of competent jurisdiction.

As Deputies know, this Resolution relates to the stamp duty on the transfer of property. I want to make it clear that the increased rate of stamp duty will not apply where local authorities provide houses for tenant purchasers or where a public utility society builds a house and sells it to one of its members. That is usually done with no profit taken by the society. In the Finance Bill I will introduce amendments in order to clarify that position and in order to ensure that there will be no alteration in the rate of stamp duty on houses built either by local authorities for tenant purchasers or by public utility societies for sale with no profit to their own members. Another point which I propose to introduce in the Finance Bill is an amendment relating to the voluntary transfer of property by people who, during their lifetime, wish to transfer their lands to sons or to other lineal descendants of themselves or to a brother or sister. In such cases the rate of stamp duty that will apply will be the same as that which applied heretofore. The stamp duty does not affect transfers made in consideration of marriage. The fixed duty on that will continue to be the 10/- per cent. no matter what the amount of property transferred.

Another point which has been raised by some professional organisations and by the legal profession is the difficulty that there might be in certain cases of completing the execution of a sale, which was in course of being made, before the first day of December. I have consulted the Revenue Commissioners and we have come to this arrangement: if the Revenue Commissioners are notified that a contract was entered into before this day—the 29th of October—and where they are satisfied that a contract had, in fact, been entered into before the 29th day of October, they are agreeable that the new rates of duty will not apply.

I thought when introducing the Budget that giving up to the 1st day of December was sufficiently long to cover all current cases but the representatives of the solicitors' profession explained that in certain cases it might not be possible for them to complete all the documents of sale within that period. If the Revenue Commissioners now get notification before the 1st day of December the new rate of duty will not apply.

Mr. McGilligan

Does this mean if before the 1st December the Revenue Commissioners are notified of contracts entered into before the 29th October?

Mr. Aiken

Yes. The situation is this, according to this Resolution: If a person could enter into a contract to buy on the 30th November and if he could complete all the documents, he could get a stamp for the old rate of duty. I intended that that might take place in certain cases. I thought a six-weeks' average time was sufficient to cover all these cases but it has been pointed out that there are certain cases in which there is difficulty about title and matters of that kind in which it cannot be done.

The last difficulty which confronted me referred to the amount which becomes payable where a conveyance which attracted the higher rate of duty—£25 per cent.—was not stamped at this rate within 30 days of execution. It has been represented to me that this provision as it stands will have to be invoked where a simple delay, without any suggestion of evasion of duty, had occurred, possibly through illness or pressure of other work. Under the existing law, when a penalty has been incurred through failure to stamp documents the Revenue Commissioners have power to mitigate or remit a penalty if they think fit.

On consideration I propose that these powers may be extended to cover the sum payable by a transferee who has not stamped his conveyance at the higher rate but the powers will extend only to those cases where the delay in stamping the conveyance did not exceed three months from the date of its first execution. I think these cover the points of the amendments that I want to see introduced to the stamp duties. The wider question to which Deputy Byrne's amendment related, I think, should be debated on the Finance Bill itself.

Mr. Costello

This is really a matter for solicitors to some extent but it is also a matter for clients, and if the Minister tells me that an agreement has been reached with the Incorporated Law Society, who represent solicitors, I must pay considerable respect to that. But it is a matter affecting, not merely solicitors and the profession, it is a matter that affects clients and it has been known that solicitors have forgotten to do certain things. In fact, it has been frequently known that they forgot to do certain things. So that, if a solicitor inadvertently forgot to give this notification may be the client would suffer even though there was a contract in existence. I would like just to have the matter examined to see whether or not a statutory requirement of notification might not in certain circumstances work hardship on the clients. Beyond that, I have nothing to say. The indication the Minister has given meets one of the matters that I had intended to raise and was asked to raise, not by solicitors but by members of my own profession who in fact are engaged at the present time in clearing up titles, and there is no possibility that titles in reference to contracts which have been entered into months ago could be cleared by the 1st December, 1947. Mortgages are outstanding which cannot be got in and there are other matters of that kind. However, the Minister has indicated his views on this matter and we will await the inspection and consideration of the proposals when we see them in print.

Would the Minister tell me whether or not transfer of property by a father to his son on the occasion of his son's marriage which, in law at all events, is a voluntary conveyance, would come within the revenue definition of a conveyance in consideration of marriage? Legally, it will not. There is no consideration for the father transferring his lands to his son on his son's marriage but I want to be assured that that particular transaction will get the benefit of this proposed privilege because it is a matter of some considerable importance in the country and one to which I had intended to advert on this Resolution.

On the general principle, if I had any assurance or belief that the proposed increase in taxation on the transfer of property would have any possible effect in rendering it either cheaper or easier to purchase a house at a reasonable cost at the present time and in existing circumstances, I would be wholeheartedly in support of this Resolution. However, on such consideration as I have been able to give it, and on anything that I have been able to learn, these additional taxes will have no effect on those people who are inflating the purchase price of houses and of other dwellings with vacant possession on ordinary people at the present time. We know that there are such people, that they have an unlimited amount of money and that they are able to pay three, four and five times the ordinary market value of a house in order to secure vacant possession in existing circumstances. The additional £300 or £400 that will be imposed by this taxation will make little, if any, difference to those people, just as the additional percentage that is paid to auctioneers on these increased prices has, in the past, not made any difference to them in their efforts to buy houses. But it will make a substantial difference to those people who are trying to buy a house at some sort of a reasonable rate at the present time. If these taxes are continued after the demands of those rich people, the people who have money to spend and are prepared to spend it in purchasing a house at any price, have been fulfilled—as I suppose they must be fulfilled some time—it will render it still more impossible for people in ordinary circumstances to buy houses in which they wish to reside. It will make it impossible for young people getting married to buy a house. It is impossible for them to do so at present. There is not any hope for them in the immediate future, apart even from these additional stamp duties. But if these taxes are continued beyond a certain period they will put it beyond the bounds for young people getting married, or of young people who have got married to purchase a house until they are grandmothers and grandfathers.

I cannot see any justification for this increased taxation beyond producing revenue. If it produces revenue from the people who are spilling out money at the present time in their avaricious desire to get house property at any price, then it is a good tax, but if it is merely intended to produce revenue, then it is a bad tax. The situation in this country at the present time in regard to house property and the price of it—the possibility of getting clear possession of a house within the range of any ordinary income—is bleak in the last degree for those people who are looking for houses. The number of houses that have been built is very much below the requirements of people at the present time. Even such houses as are being built are being sold at exorbitant prices. We know of one particular case where a builder built a house actually and was able to sell it at £X, giving himself a reasonable profit. The person to whom he sold it, sold it a few weeks later for £X plus £Y hundreds of pounds, while he in turn sold it again for £X plus £Y plus £Z hundreds of pounds. These additional taxes will not make any difference to the people with the moneybags. We may have our own views as to where they got the money, but it will not make any difference to them. It will make a difference, however, to young people who have got married and are trying to get a house for themselves. The prospect for them is rendered hopeless indeed by the imposition of this new taxation. I cannot see any justification in principle for it, and perhaps the Minister would reconsider some other method of getting the additional taxation that he requires. Since I believe that this additional taxation will result merely in making house property dearer and the provision of houses for people who have only limited means impossible, I think the Minister's proposals are unjustified.

Mr. Everett

In cases where application is made to the Land Commission for the subdivision of holdings, we know that it sometimes takes from six to 12 months before the consent is received. I know that, in connection with two or three small farms in my constituency, applications under this head have been made to the Land Commission. They may not give their consent for two or three months. I am asking the Minister to see that the Land Commission will certify to the Revenue Commissioners that these applications were made before October so that the applicants concerned will not be charged the higher rate of duty. The delay is not due to any fault of theirs, and hence I hope that what I suggest will be done.

Mr. Morrissey

I propose to confine myself on this Resolution to this new imposition on our own nationals. I intend to deal with the matter more fully on the Finance Bill. I do not know what the Minister's intention was in increasing the stamp duty on our own nationals from 1 per cent. to 5 per cent. If he thought that by doing so he was going in any way to improve the housing situation in the country I can tell him that he is sadly mistaken. If this is meant as a purely revenue tax, then I suggest to him that he ought to try to get his revenue from some source other than houses. Anybody who knows anything about the housing position, the housing market or the property market will, I think, agree with me that so far as the lower priced property is concerned, particularly the lower priced houses, this tax will be paid entirely by the purchaser. So far as the higher priced properties are concerned—I am speaking now of the £10,000, £15,000, £20,000 and £30,000 properties—if they are purchased by non-nationals the possibility is that they may pay some portion of these duties. Personally, what I think will happen is that it is the Irish nationals who are selling the properties who will be mulcted in the full 25 per cent. by a reduction in the price that they would otherwise get.

I propose to confine myself to the housing position in the City of Dublin and the townships, and to the tremendous demand there is for any house ranging in price from £1,500 to £3,000. I shall confine myself to a narrower circle—to the house selling at between £1,500 and £2,500. It is quite well known to everybody that at the present time, within ten or 15 miles of Dublin, it is impossible to get any sort of house at £1,500—that is, anything worth being called a house. Let us take the case of the £2,000 house and the position of the man who is in a flat or in lodgings or who may be sharing part of a house with his parents or other relatives. He is, say, thinking of getting married, and he intends to buy a house at £2,000, if he can get one. In at least 90, if not 95 per cent. of these cases, anything up to a maximum of 80 per cent. of the price of the house has to be borrowed.

Take the man who has borrowed or saved £500 and wants to buy a £2,000 house. If he succeeds in getting a house for £2,000, he gets the maximum loan from a building society of 80 per cent. At the moment, that £500 will about see him through; it hardly will, but let us say it will. A sum of £400 goes by way of deposit, and the other £1,600 is put up by the building society. The stamp duty is £20. Deputy O'Connor, if he speaks on this, will probably be in a better position to inform the House about it than I am. I think the remaining £80 would put him through, or very near it. What is his position if the stamp duty is increased to £100, or £80 more? He cannot touch that type of house. It probably means that that man will be at least another year trying to put together, by way of saving and skimping, that additional £80. Is it not rather absurd that, on the one hand, we should be giving free grants to builders to build houses out of taxation and then, when they are built, tax the people who are trying to buy them?

I can see no case, good, bad or indifferent, that can possibly be made for this increase. It is a heavy impost upon people who are already the victims of the inflationary prices that houses have reached. I have some idea of the terrific demand there is for houses. We know that numbers of prospective fathers and mothers dare not have a family on pain of being expelled from the flat or room which they now occupy. We know sad cases of young couples with a child or two who will not even be considered as occupants of flats or rooms in this city. We all know there is no such thing nowadays as a house to rent. To-day a person who has not a house or a home has only one possible chance of getting a house or a home and that is by buying it in the open market.

I suggest to the Minister that this will be a harsh tax, particularly in a country like this where, instead of putting any further obstacles in the way of people getting married, we should be trying to remove whatever obstacles there are as our marriage rate is so lamentably low. I can see no earthly reason for this tax. To me it seems to be only a revenue tax pure and simple. If revenue has to be got, I suggest that this is the last place where the Minister should seek it.

I think the Minister appreciates this matter as much as anybody else. He probably knows, because it is rather notorious, of the great scarcity of houses, the huge number of people who are looking for houses and who are unable to get them. You will not improve the position by increasing the stamp duty on those people who some day hope to own a home of their own. I assure the Minister that, in my humble opinion anyway, so far as lower-priced properties are concerned, this is a tax that will hit, not the seller of the house or the property, but the purchaser and, God knows, he has already a heavy burden enough to bear.

Mr. Aiken

As it is near 7 o'clock I should like to reply to the points Deputy Morrissey has made now.

I thought there was another idea in this which I was inclined to welcome. I am referring to the tax on the non-Irish citizen of 25 per cent. I do not know if what Deputy Morrissey says will happen, but I want to take as an example the opposite case. In the case of a £12,000 property, the man who is inclined to pay £12,000, the man of the type which, we are told, is swarming into the country, will not baulk at paying £15,000, as he will be paying in future if it comes off the purchaser. What will happen then? I thought I saw in this the germ of a proper idea—a recognition by the Minister that the English £ was over-valued here. I asked recently if he could tell me what the real value of the £ sterling in terms of Irish money was and I thought that this meant an appreciation that it was worth about 15/-. I do not think it is even worth as much, but only one man, the Governor of the Central Bank, can tell me that.

What will be the result of all this if the situation is different from what Deputy Morrissey thinks will happen? Hordes of people who want houses at £12,000 will come in and will pay another £3,000 by way of tax. That will mean £15,000 of English money lodged in this country and then we will go through the same old system. We will print the equivalent in Irish notes of these sums of £15,000 which we get in English notes and pay pound for pound. We will send back the English notes which will be banked for us on the other side, and, when we call on these for goods, we will get 10/- worth of goods for every pound we have banked. We lose both on exchange and when it comes to trade.

I shall have to give serious consideration to the Minister's new economics with regard to the impact of this tax on houses and their prices. If there is to be a tax on the vendor—it is not so at the moment; there will be an easy way of making it so, which the Minister does not propose, but thinks will work out that way—there will be a reduction in the price of houses. I thought that was his argument. If the vendor feels he is going to lose because of the stamp duty, will he not put the price up? What is to prevent him? It is not because there is any sufficient supply of houses to meet the demand. We all know that. What has held the prices down to what they are at the moment, I do not know, but they rise month by month and there is no sign of any drop. That is the situation with regard to outsiders.

With regard to nationals, can the Minister seriously argue, the house scarcity position being as it is, there is any possible merit in imposing a tax on people who want to buy houses? The Minister hopes that it will be paid by the vendor, but I do not think it will, and, if it is paid by the purchaser, it means that there will be a rise in the already swollen prices being paid for houses. That is not good socially, at present.

Mr. Cogan

The Minister's explanation of this imposition is so bewildering as to make it very difficult for any Deputy to attempt to unravel it in the three minutes left. I am not so well informed in the matter of the situation with regard to house property in the city, but I think it highly undesirable that a levy or tax should be imposed on people who desire to buy or sell property. Whether it is the vendor or the purchaser who pays, neither the one nor the other is an undesirable section of the community. The sale and purchase of land or other property is a desirable business which ought not to be taxed out of existence. Take the case of a farmer who has more land than he is able to manage adequately. Why should he be taxed if he tries to dispose of some of it to enable some other person to purchase an economic holding?

At present, we have legislation which seeks in various ways, by grants, subsidies and loans, to assist the construction and erection of dwellings on small holdings. With one hand, we try to encourage the provision of new homes and homesteads and, with the other, to discourage and put a stop to that desirable activity. This position is not similar to that of the vicious consumer of tobacco, of wines, spirits and beer whom it is sought to convert to a more virtuous way of living by taxation. This is a desirable enterprise which ought to be encouraged.

The sale of land by one citizen to another and the construction of houses —these are highly desirable and urgently needed. And yet, in this tax of 5 per cent., we have an attempt to discourage them, if not to bring them to a standstill. I can see no justification whatever for this levy. So far as the levy of 25 per cent. on the sale of property to non-nationals is concerned, I think we should go much further and should seek to prevent undesirable aliens from acquiring property in this country.

Dáil Éireann debate - Wednesday, 29 Oct 1947

Mr. Morrissey

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Dáil Éireann debate -
Wednesday, 29 Oct 1947