Dáil Éireann debate -
Wednesday, 28 Jan 1998

Vol. 486 No. 1

Written Answers. - Stamp Duty.

Noel Ahern

Question:

509 Mr. N. Ahern asked the Minister for Finance the current annual revenue from stamp duty on residential properties; the similar taxes in EU member states; the way in which the current high rates are justified; the limits which would exist if they were indexed to the consumer price index or house construction index since first introduced; and if he can offer a prospect of a reduction in the rates to the many people who feel the rates are draconian. [1717/98]

Minister for Finance (Mr. McCreevy):

I am informed by the Revenue Commissioners that the yield from stamp duty on all property transactions for 1997 was £250 million. While the exact figure is not available, it is estimated that stamp duty on residential property accounted for about £150 million of the 1997 yield.

The rate of stamp duties in the UK is 1 per cent and it applies only to property over £60,000. However, in addition to this, I understand that property owners face substantial annual charges, that is in areas of London a property valued between £160,000 and £320,000 could have an annual council tax of £1,000 in addition to other local charges. Apart from the UK, Irish stamp duty rates compare favourably with rates on the transfer of all property in several other EU member states and these are set as follows:

Austria 3.5 per cent	Belgium 12.5 per cent
Denmark 0.6 or 1.2 per cent	Finland 4 per cent
Sweden 1.5 or 3 per cent	UK 1 per cent
Greece 9, 11 or 13 per cent	Italy 6 to 17 per cent
Luxembourg 6 or 9 per cent	Netherlands 6 per cent
France 18.2 commercial buildings	Germany 3.5 per cent on transfer of land
Portugal 10 per cent land and buildings and 8 per cent farmland
Spain 6 per cent (applied to real estate transaction not subject to VAT)

It is unclear as to what time period the Deputy is referring to with regard to his question on indexation, although the further back one goes the greater the effect of indexation on the present bands structure. However, if for example the present stamp duty bands were indexed to take account of the increase in the consumer price index since 1990, which was when the last change to the bands was made prior to the introduction of the higher rates in 1997, then the following bands would apply:

Between £0 and up to £6,000	not liable
>£6,000 and up to £12,000	1 per cent
>£12,000 and up to £18,000	2 per cent
>£18,000 and up to £30,000	3 per cent
>£30,000 and up to £59,000	4 per cent
>£59,000 and up to £71,000	5 per cent
>£71,000 and up to £152,000	6 per cent
>£152,000 and up to £162,000	7 per cent
>£162,000 and up to £172,000	8 per cent
in excess of £172,000	9 per cent

The Revenue Commissioners have estimated that to re-base the existing band structure to reflect changes in the consumer price index since 1990 would cost the Exchequer about £6 million per annum. Furthermore there would be an additional further loss in revenue if the rates were indexed on an annual basis.

Any major relieving changes in the existing rules would be very costly to the Exchequer. The existing yield from stamp duty must be viewed in the context of overall tax policy, a key element of which is to redress the tendency for earned income to contribute an increasing share of total revenues and stamp duty plays a significant role in this regard. Furthermore any reduction in stamp duty liability may be to the benefit of the vendor rather than to the purchaser and lower rates might encourage speculative investors to get involved in the housing market in the hope of realising a quick profit.