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Dáil Éireann debate -
Tuesday, 28 Apr 1998

Vol. 490 No. 2

Financial Resolution-Stamp Duties: Motion (Resumed).

Debate resumed on the following motion:
(1) THAT in this Resolution—
"the Act of 1891" means the Stamp Act, 1891;
"the Commissioners" means the Revenue Commissioners;
"the First Schedule" means the First Schedule (as amended by the Finance Act, 1970 (No. 14 of 1970), and subsequent enactments) to the Act of 1891.
(2) THAT, subject to paragraph (3) of this Resolution, this Resolution shall have effect as respects instruments executed on or after the 23rd day of April, 1998.
(3) Paragraphs (8), (9), (11) and (12) of this Resolution shall not apply as respects any instrument executed prior to the 1st day of October, 1998, in pursuance of a contract which was evidenced in writing prior to the 23rd day of April, 1998.
(4) THAT the First Schedule is hereby amended—
(a) by the substitution of the Heading set out in Part I of the Schedule to this Resolution for the Heading (as amended by the Finance Act, 1997 (No. 22 of 1997)) "CONVEYANCE or TRANSFER on sale of any property other than stocks or marketable securities or a policy of insurance or a policy of life insurance", and
(b) by the substitution of the subparagraphs set out in Part II of the Schedule to this Resolution for subparagraph (a) of paragraph (3) (inserted by the Finance Act, 1997), of the Heading "LEASE".
(5) THAT section 4 of the Act of 1891 is hereby amended by the insertion of the following paragraph after paragraph (b):
"(c) Without prejudice to the generality of paragraphs (a) and (b), where the consideration (other than rent) for the sale or lease of any property is partly attributable to residential property and partly attributable to property which is not residential property the instrument of conveyance or transfer or lease shall be chargeable toad valorem stamp duty on the basis that it is a separate conveyance or transfer or lease of residential property to the extent that that consideration is attributable to residential property and also a separate conveyance or transfer or lease of property which is not residential property to the extent that that consideration is attributable to property which is not residential property.”.
(6) THAT section 58 of the Act of 1891 is hereby amended by the substitution of the following subsection for subsection (1A) (inserted by the Finance Act, 1997:
"(1A) Where—
(a) any property which consists partly of an interest in residential property is sold to any person and the sale (hereinafter in this subsection referred to as ‘the first-mentioned sale') does not form part of a larger transaction or of a series of transactions, or
(b) the sale to any person of property consisting in whole or in part of such an interest forms part of a larger transaction or of a series of transactions,
the consideration attributable to the first-mentioned sale and the aggregate consideration (other than rent) attributable to that larger transaction or series of transactions, as the case may be, shall be apportioned, on such basis as is just and reasonable, as between that interest in residential property and the other property or part concerned, and that aggregate consideration shall likewise be apportioned as between each other such interest (if any) comprised in that larger transaction or series of transactions and the other property or parts concerned, and notwithstanding the amount or value of the consideration set forth in any instrument—
(i) the consideration so apportioned to that interest shall be deemed to be the amount or the value of the consideration for the sale which is attributable to that interest and the consideration so apportioned to the aggregate of all such interests comprised in that larger transaction or series of transactions shall be deemed to be the amount or value of that aggregate consideration which is attributable to residential property, and
(ii) the consideration so apportioned to the other property or part or parts concerned shall be deemed to be the amount or value of the consideration for the sale, or of that aggregate consideration, as the case may be, which is attributable to property which is not residential property.".
(7) THAT section 77 of the Act of 1891 is hereby amended by the substitution of the following subsection for subsection (6) (inserted by the Finance Act, 1997):
"(6) Where—
(a) any property which consists partly of an interest in residential property is leased to any person and that lease (hereinafter in this subsection referred to as ‘the first-mentioned lease') does not form part of a larger transaction or of a series of transactions, or
(b) the lease to any person of property consisting in whole or in part of such an interest forms part of a larger transaction or of a series of transactions,
the consideration attributable to the first-mentioned lease and the aggregate consideration (other than rent) attributable to that larger transaction or series of transactions, as the case may be, shall be apportioned, on such basis as is just and reasonable, as between that interest in residential property and the other property or part concerned, and that aggregate consideration shall likewise be apportioned as between each other such interest (if any) comprised in that larger transaction or series of transactions and the other property or parts concerned, and notwithstanding the amount or value of the consideration set forth in any instrument—
(i) the consideration so apportioned to that interest shall be deemed to be the amount or the value of the consideration for the lease which is attributable to that interest and the consideration so apportioned to the aggregate of all such interests comprised in that larger transaction or series of transactions shall be deemed to be the amount or value of that aggregate consideration which is attributable to residential property, and
(ii) the consideration so apportioned to the other property or part or parts concerned shall be deemed to be the amount or value of the consideration for the lease, or of that aggregate consideration, as the case may be, which is attributable to property which is not residential property.".
(8) THAT section 49 of the Finance Act, 1969 (No. 21 of 1969), is hereby amended—
(a) by the substitution of the following subsection for subsection (1):
"(1) Subject to subsection (2B) of this section, an instrument giving effect to the purchase of a dwellinghouse or apartment upon the erection thereof shall be exempt from all stamp duties.",
(b) in subsection (2B) (inserted by the Finance Act, 1996 (No. 9 of 1996)) by the substitution in paragraph (a) of the following subparagraphs for subparagraph (i):
"(i) the instrument gives effect to the purchase of a dwellinghouse or apartment upon the erection thereof, and
(ia) until the expiration of the period of 5 years commencing on the date of the execution of the instrument or the subsequent sale (other than a sale the contract for which, if it were a written conveyance, would not be charged with fullad valorem duty or a sale to a company under the control of the vendor or of any person entitled to a beneficial interest in the dwellinghouse or apartment immediately priorto the sale or to a company which would, in relation to a notional gift of shares in that company taken by that last-mentioned person immediately prior to the sale, be under the control of the donee or successor within the meaning of section 16 of the Capital Acquisitions Tax Act, 1976 (No. 8 of 1976) and irrespective of the shares the subject-matter of the notional gift) of the dwellinghouse or apartment concerned, whichever event first occurs, that dwellinghouse or apartment will be occupied as the only or principal place of residence of the purchaser, or if there be more than one purchaser, of any one or more of the purchasers or of some other person in right of the purchaser or, if there be more than one purchaser, of some other person in right of any one or more of the purchasers and that no person, other than by virtue of a title prior to that of the purchaser, will derive any rent or payment in the nature of rent for the use of that dwellinghouse or apartment, or of any part of it, during that period, and”,
and
(c) by the insertion of the following paragraph after paragraph (a):
"(aa) Where, in relation to an instrument which is exempted from stamp duty by virtue of subsection (1) and at any time during the period referred to in paragraph (a)(ia), some person, other than by virtue of a title prior to that of the purchaser, derives any rent or payment in the nature of rent for the use of the dwellinghouse or apartment concerned, or of any part of it, the purchaser, or where there be more than one purchaser, each such purchaser, shall—
(i) jointly and severally become liable to pay to the Revenue Commissioners a fine equal to the amount of the duty which would have been charged in the first instance if the dwellinghouse or apartment had been conveyed or transferred or leased by an instrument to which this section had not applied together with interest on that amount charged at a rate of 1 per cent per month or part of a month from the date when the rent or payment is first received to the date the fine is remitted, and
(ii) the person who receives the rent or payment shall, within 6 months after the date of the payment, notify the payment to the Revenue Commissioners on a form provided, or approved of, by them for the purposes of this section, unless that person is already aware that the Revenue Commissioners have already received such a notification from another source.".
(9) THAT section 112 of the Finance Act, 1990 (No. 10 of 1990), is hereby amended—
(a) in subsection (1) (inserted by the Finance Act, 1993 (No. 13 of 1993)) by the substitution of the following paragraphs for paragraphs (a) and (b):
"(a) in the case of such sale, under the Heading "CONVEYANCE or TRANSFER on sale of any property other than stocks or marketable securities or a policy of insurance or a policy of life insurance" in the First Schedule (as amended by the Finance Act, 1970, and subsequent enactments) to the Stamp Act, 1891, as if the property concerned were residential property on an amount equal to the aggregate of—
(i) any consideration paid in respect of the sale of that land, and
(ii) any consideration paid, or to be paid, in respect of the building of the dwellinghouse or apartment on that land;
(b) in the case of such lease, under subparagraph (a) of paragraph (3) of the Heading "LEASE" in the First Schedule (as amended by the Finance Act 1970, and subsequent enactments) to the Stamp Act, 1891, as if the property concerned were residential property on an amount equal to the aggregate of—
(i) any consideration (other than rent) paid in respect of the lease of that land, and
(ii) any consideration paid, or to be paid, in respect of the building of the dwellinghouse or apartment on that land.",
and
(b) in paragraph (a) of subsection (3) by the substitution of "the aggregate consideration which is chargeable under subsection (1)" for "such aggregate consideration".
(10) THAT section 121 of the Finance Act, 1997, is hereby amended in subsection (2) by the deletion of the proviso thereto.
(11)(a) THAT where, in relation to an instrument to which this paragraph applies—
(i) the instrument gives effect to the purchase of a dwellinghouse or apartment upon the erection thereof and under section 49 of the Finance Act, 1969, and section 112 (as amended by paragraph (9) of this Resolution) of the Finance Act, 1990, do not apply, the consideration (other than rent) for the sale shall for the purposes ofad valorem duty be treated as being reduced by 75 per cent, and
(ii) the instrument is one to which section 112 (as amended by paragraph (9) of this Resolution), of the Finance Act, 1990 applies, that section shall apply to that instrument as if the following paragraphs were substituted for paragraphs (a) and (b) of subsection (1) of that section and paragraph (9)(b) of this Resolution did not apply:
"(a) in the case of such sale, under the Heading ‘CONVEYANCE or TRANSFER on sale of any property other than stocks or marketable securities, or a policy of insurance, or a policy of life insurance, in the First Schedule (as amended by the Finance Act, 1970, and subsequent enactments) to the Stamp Act, 1891, as if the property concerned were residential property on an amount which is the greater of—
(i) any consideration paid in respect of the sale of that land, and
(ii) 25 per cent of the aggregate of the consideration at subparagraph (i) and the consideration paid, or to be paid, in respect of the building of the dwellinghouse or apartment on that land;
(b) in the case of such lease, under the Heading ‘LEASE' in the First Schedule (as amended by the Finance Act, 1970, and subsequent enactments) to the Stamp Act, 1891, as if the property concerned were residential property on an amount which is the greater of—
(i) any consideration (other than rent) paid in respect of the lease of that land, and
(ii) 25 per cent of the aggregate of the consideration at subparagraph (i) and the consideration paid, or to be paid, in respect of the building of the dwellinghouse or apartment on that land.",
and
(b) THAT this paragraph applies to an instrument which contains a statement, in such form as the Commissioners may specify, certifying that—
(i) the instrument—
(I) gives effect to the purchase of a dwellinghouse or apartment upon the erection thereof and that section 49 of the Finance Act, 1969, and section 112 (as amended by paragraph (9) of this Resolution) of the Finance Act, 1990, do not apply, or
(II) is one to which section 112 (as amended by paragraph (9) of this Resolution), of the Finance Act, 1990 applies.
and
(ii) until the expiration of the period of 5 years commencing on the date of the execution of the instrument or the subsequent sale (other than a sale the contract for which, if it were a written conveyance, would not be charged with fullad valorem duty or a sale to a company under the control of the vendor or of any person entitled to a beneficial interest in the dwellinghouse or apartment immediately prior to the sale or to a company which would, in relation to a notional gift of shares in that company taken by that last-mentioned person immediately prior to the sale, be under the control of the donee or successor within the meaning of section 16 of the Capital Acquisitions Tax Act, 1976 (No. 8 of 1976) and irrespective of the shares the subject-matter of the notional gift) of the dwellinghouse or apartment concerned, whichever event first occurs, that dwellinghouse or apartment will be occupied as the only or principal place of residence of the purchaser, or if there be more than one purchaser, of any one or more of the purchasers or of some other person in right of the purchaser or, if there be more than one purchaser, of some other person in right of any one or more of the purchasers and that no person, other than by virtue of a title prior to that of the purchaser, will derive any rent or payment in the nature of rent for the use of that dwellinghouse or apartment, or of any part of it, during that period.”.
(12) THAT where paragraph (11) of this Resolution applies to an instrument and at any time during the period referred to in paragraph (11)(b)(ii) of this Resolution, some person, other than by virtue of a title prior to that of the purchaser, derives any rent or payment in the nature of rent for the use of the dwellinghouse or apartment concerned, or of any part of it, the purchaser, or where there be more than one purchaser, each such purchaser, shall—
(i) jointly and severally become liable to pay to the Commissioners a fine equal to the difference between the amount of the duty which would have been charged in the first instance if the dwellinghouse or apartment had been conveyed or transferred or leased by an instrument to which paragraph (11) of this Resolution had not applied and the amount of duty which was actually charged, together with interest on that amount charged at a rate of 1 per cent per month or part of a month from the date when the rent or payment is first received to the date the fine is remitted, and
(ii) the person who receives the rent or payment shall, within 6 months after the date of the payment, notify the payment to the Commissioners on a form provided, or approved of, by them for the purposes of this section, unless that person is already aware that the Commissioners have already received such a notification from another source.
(13) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).
SCHEDULE
STAMP DUTY ON INSTRUMENT
Part I
Conveyance or Transfer on Sale of any property other than stocks or marketable securities or a policy of insurance or a policy of life insurance.
"CONVEYANCE or TRANSFER on sale of property other than stocks or marketable securities or a policy of insurance or a policy of life insurance.
(1) Where the amount or value of the consideration for the sale which is attributable to residential property, or would be so attributable if the contents of residential property were considered to be residential property, does not exceed £60,000 and the instrument contains a statement certifying that the consideration for the sale is, as the case may be—
(a) wholly attributable to residential property, or
(b) partly attributable to residential property,
and 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 which is attributable to residential property, or which would be so attributable if the contents of residential property were considered to be residential property, does not exceed £60,000:

for the consideration which is attributable to residential property . . .

Exempt

(2) Where paragraph (1) does not apply and the amount or value of the consideration for the sale which is attributable to residential property, or would be so attributable if the contents of residential property were considered to be residential property, does not exceed £100,000 and the instrument contains a statement certifying that the consideration for the sale is, as the case may be —
(a) wholly attributable to residential property, or
(b) partly attributable to residential property,
and 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 which is attributable to residential property, or which would be so attributable if the contents of residential property were considered to be residential property, does not exceed £100,000:

for every £100, or fractional part of £100, of the consideration which is attributable to residential property . . .

£3.00

(3) Where paragraphs (1) and (2) do not apply and the amount or value of the consideration for the sale which is attributable to residential property, or would be so attributable if the contents of residential property were considered to be residential property, does not exceed £170,000 and the instrument contains a statement certifying that the consideration for the sale is, as the case may be—
(a) wholly attributable to residential property, or
(b) partly attributable to residential property,
and 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 which is attributable to residential property, or which would be so attributable if the contents of residential property were considered to be residential property, does not exceed £170,000:

for every £100, or fractional part of £100, of the consideration which is attributable to residential property. .

£4.00

(4) Where paragraphs (1) to (3) do not apply and the amount or value of the consideration for the sale which is attributable to residential property, or would be so attributable if the contents of residential property were considered to be residential property, does not exceed £250,000 and the instrument contains a statement certifying that the consideration for the sale is, as the case may be—
(a) wholly attributable to residential property, or
(b) partly attributable to residential property,
and 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 which is attributable to residential property, or which would be so attributable if the contents of residential property were considered to be residential property, does not exceed £250,000:

for every £100, or fractional part of £100, of the consideration which is attributable to residential property. .

£5.00

(5) Where paragraphs (1) to (4) do not apply and the amount or value of the consideration for the sale which is attributable to residential property, or would be so attributable if the contents of residential property were considered to be residential property, does not exceed £500,000 and the instrument contains a statement certifying that the consideration for the sale is, as the case may be—
(a) wholly attributable to residential property, or
(b) partly attributable to residential property,
and 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 which is attributable to residential property, or which would be so attributable if the contents of residential property were considered to be residential property, does not exceed £500,000:

for every £100, or fractional part of £100, of the consideration which is attributable to residential property. .

£7.00

(6) In any other case:

for every £100, or fractional part of £100, of the consideration which is attributable to residential property. .

£9.00

(7) Where the amount or value of the consideration for the sale which is attributable to property which is not residential property does not exceed £5,000 and the instrument contains a statement certifying that the consideration for the sale is, as the case may be—
(a) wholly attributable to property which is not residential property, or
(b) partly attributable to residential property,
and 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 which is attributable to property which is not residential property exceeds £5,000:

for the consideration which is attributable to property which is not residential property

Exempt

(8) Where paragraph (7) does not apply and the amount or value of the consideration for the sale which is attributable to property which is not residential property does not exceed £10,000 and the instrument contains a statement certifying that the consideration for the sale is, as the case may be—
(a) wholly attributable to property which is not residential property, or
(b) partly attributable to residential property,
and 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 which is attributable to property which is not residential property exceeds £10,000:

for every £100, or fractional part of £100, of the consideration which is attributable to property which is not residential property which is not residential property. . .

£1.00

(9) Where paragraphs (7) and (8) do not apply and the amount or value of the consideration for the sale which is attributable to property which is not residential property does not exceed £15,000 and the instrument contains a statement certifying that the consideration for the sale is, as the case may be—
(a) wholly attributable to property which is not residential property, or
(b) partly attributable to residential property, and 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 which is attributable to property which is not residential property exceeds £15,000:

for every £100, or fractional part of £100, of the consideration which is attributable to property which is not residential property. . .

£2.00

(10) Where paragraphs (7) to (9) do not apply and the amount or value of the consideration for the sale which is attributable to property which is not residential property does not exceed £25,000 and the instrument contains a statement certifying that the consideration for the sale is, as the case may be—
(a) wholly attributable to property which is not residential property,
or
(b) partly attributable to residential property,
and 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 which is attributable to property which is not residential property exceeds £25,000:

for every £100, or fractional part of £100, of the consideration which is attributable to property which is not residential property. . .

£3.00

(11) Where paragraphs (7) to (10) do not apply and the amount or value of the consideration for the sale which is attributable to property which is not residential property does not exceed £50,000 and the instrument contains a statement certifying that the consideration for the sale is, as the case may be—
(a) wholly attributable to property which is not residential property, or
(b) partly attributable to residential property,
and 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 which is attributable to property which is not residential property exceeds £50,000:

for every £100, or fractional part of £100, of the consideration which is attributable to property which is not residential property. . .

£4.00

(12) Where paragraphs (7) to (11) do not apply and the amount or value of the consideration for the sale which is attributable to property which is not residential property does not exceed £60,000 and the instrument contains a statement certifying that the consideration for the sale is, as the case may be—
(a) wholly attributable to property which is not residential property,
or
(b) partly attributable to residential property,
and 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 which is attributable to property which is not residential property exceeds £60,000:

for every £100, or fractional part of £100, of the consideration which is attributable to property which is not residential property. . .

£5.00

(13) In any other case:

for every £100, or fractional part of £100, of the consideration which is attributable to property which is not residential property. . .

£6.00

(14) Where in the case of a conveyance or transfer on sale or in the case of a conveyance or transfer operating as a voluntary dispositioninter vivos the instrument contains a certificate by the party to whom the property is being conveyed or transferred to the effect that the person becoming 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 related to the person or each of the persons immediately theretofore entitled to the entire beneficial interest in the property in one or other of the following ways, that is to say, as a lineal descendant, parent, grandparent, step-parent, husband or wife, brother or sister of a parent or brother or sister, or lineal descendant of a parent, husband or wife or brother or sister:
a duty of an amount equal to one-half of thead valorem stamp duty which, but for the provisions of this paragraph, would be chargeable under this Heading.”.
Part II
Lease
"(a) where the consideration, or any part of the consideration (other than rent), moving either to the lessor or to any other person, consists of any money, stock or security, and—
(i) the amount or value of such consideration which is attributable to residential property, or would be so attributable if the contents of residential property were considered to be residential property, does not exceed £60,000 and the lease contains a statement certifying that the consideration (other than rent) for the lease is, as the case may be—
(I) wholly attributable to residential property, or
(II) partly attributable to residential property,
and 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 (other than rent) which is attributable to residential property, or which would be so attributable if the contents of residential property were considered to be residential property, does not exceed £60,000:

for the consideration which is attributable to residential property . . .

Exempt

(ii) the amount or value of such consideration which is attributable to residential property, or would be so attributable if the contents of residential property were considered to be residential property, does not exceed £100,000 and the lease contains a statement certifying that the consideration (other than rent) for the lease is, as the case may be—
(I) wholly attributable to residential property, or
(II) partly attributable to residential property,
and 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 (other than rent) which is attributable to residential property, or which would be so attributable if the contents of residential property were considered to be residential property, does not exceed £100,000 and clause (i) does not apply:

for every £100, or fractional part of £100, of the consideration which is attributable to residential property

£3.00

(iii) the amount or value of such consideration which is attributable to residential property, or would be so attributable if the contents of residential property were considered to be residential property, does not exceed £170,000 and the lease contains a statement certifying that the consideration (other than rent) for the lease is, as the case may be—
(I) wholly attributable to residential property, or
(II) partly attributable to residential property,
and 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 (other than rent) which is attributable to residential property, or which would be so attributable if the contents of residential property were considered to be residential property, does not exceed £170,000 and clauses (i) and (ii) do not apply:

for every £100, or fractional part of £100, of the consideration which is attributable to residential property. .

£4.00

(iv) the amount or value of such consideration which is attributable to residential property, or would be so attributable if the contents of residential property were considered to be residential property, does not exceed £250,000 and the lease contains a statement certifying that the consideration (other than rent) for the lease is, as the case may be—
(I) wholly attributable to residential property, or
(II) partly attributable to residential property,
and 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 (other than rent) which is attributable to residential property, or which would be so attributable if the contents of residential property were considered to be residential property, does not exceed £250,000 and clauses (i) to (iii) do not apply:

for every £100, or fractional part of £100, of the consideration which is attributable to residential property. .

£5.00

(v) the amount or value of such consideration which is attributable to residential property, or would be so attributable if the contents of residential property were considered to be residential property, does not exceed £500,000 and the lease contains a statement certifying that the consideration (other than rent) for the lease is, as the case may be—
(I) wholly attributable to residential property, or
(II) partly attributable to residential property,
and 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 (other than rent) which is attributable to residential property, or which would be so attributable if the contents of residential property were considered to be residential property, does not exceed £500,000 and clauses (i) to (iv) do not apply:

for every £100, or fractional part of £100, of the consideration which is attributable to residential property. .

£7.00

(vi) the case is of any other kind:

for every £100, or fractional part of £100, of the consideration which is attributable to residential property. .

£9.00

(aa) where the consideration, or any part of the consideration (other than rent), moving either to the lessor or to any other person, consists of any money, stock or security, and—
(i) the amount or value of such consideration which is attributable to property which is not residential property does not exceed £5,000 and the lease contains a statement certifying that the consideration for the lease is, as the case may be—
(I) wholly attributable to property which is not residential property, or
(II) partly attributable to residential property,
and 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 (other than rent) which is attributable to property which is not residential property does not exceed £5,000:

for the consideration which is attributable to property which is not residential property

Exempt

(ii) the amount or value of such consideration which is attributable to property which is not residential property does not exceed £10,000 and the lease contains a statement certifying that the consideration for the lease is, as the case may be—
(I) wholly attributable to property which is not residential property, or
(II) partly attributable to residential property,
and 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 (other than rent) which is attributable to property which is not residential property does not exceed £10,000 and clause (i) does not apply:

for the consideration which is attributable to property which is not residential property

£1.00

(iii) the amount or value of such consideration which is attributable to property which is not residential property does not exceed £15,000 and the lease contains a statement certifying that the consideration for the lease is, as the case may be—
(I) wholly attributable to property which is not residential property, or
(II) partly attributable to residential property,
and 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 (other than rent) which is attributable to property which is not residential property does not exceed £15,000 and clauses (i) and (ii) do not apply:

for every £100, or fractional part of £100, of the consideration which is attributable to property which is not residential property

£2.00

(iv) the amount or value of such consideration which is attributable to property which is not residential property does not exceed £25,000 and the lease contains a statement certifying that the consideration for the lease is, as the case may be—
(I) wholly attributable to property which is not residential property, or
(II) partly attributable to residential property,
and 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 (other than rent) which is attributable to property which is not residential property does not exceed £25,000 and clauses (i) to (iii) do not apply:

for every £100, or fractional part of £100, of the consideration which is attributable to property which is not residential property

£3.00

(v) the amount or value of such consideration which is attributable to property which is not residential property does not exceed £50,000 and the lease contains a statement certifying that the consideration for the lease is, as the case may be—
(I) wholly attributable to property which is not residential property, or
(II) partly attributable to residential property,
and 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 (other than rent) which is attributable to property which is not residential property does not exceed £50,000 and clauses (i) to (iv) do not apply:

for every £100, or fractional part of £100, of the consideration which is attributable to property which is not residential property

£4.00

(vi) the amount or value of such consideration which is attributable to property which is not residential property does not exceed £60,000 and the lease contains a statement certifying that the consideration for the lease is, as the case may be—
(I) wholly attributable to property which is not residential property, or
(II) partly attributable to residential property,
and 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 (other than rent) which is attributable to property which is not residential property does not exceed £60,000 and clauses (i) to (v) do not apply:

for every £100, or fractional part of £100, of the consideration which is attributable to property which is not residential property

£5.00

(vii) the case is of any other kind:

for every £100, or fractional part of £100, of the consideration which is attributable to property which is not residential property

£6.00.”.

—(Minister for Finance)

Mr. Hayes

I am glad to have the opportunity to speak in this debate. The Government's response to this issue is not what I would have wished. It is half-hearted and does not include any long-term strategic thinking. For too long there has been a lack of long-term planning in this area. We should have seen this coming years ago. It is typical of public policy. This last census was carried out in 1996 but there was already evidence that because of the buoyant economy we were beginning to see significant numbers of people coming back into the country with significant amount of resources.

There have been significant increases in GDP every year since 1993. It has been the policy of successive Governments to support our entry into EMU and we knew that there would be some stabilisation of interest rates and that they were on a downward spiral. However, no one took account of this and it is typical of public policy that so little long-term strategic planning goes into this area.

This is a complicated problem. By definition it is multifaceted and there are many variables. It is difficult to pin down one simple solution and I sympathise with the Government's dilemma. However, the package of measures announced last week — Action on House Prices — will not go any way to reduce prices, particularly for first time buyers. No one can predict the future and I do not have a crystal ball. However, I do not believe that last week's response was a comprehensive reply to the housing crisis because the Minister failed the grasp that there are three important groups in this equation.

For the first time buyer, the interest rate reductions and much of the change in stamp duty will be nullified this year. The consequences of last December's expansionary budget will yield more disposable income. It will be cheaper to borrow money than it was last year. As a result, many of the changes in stamp duty will have no beneficial effect.

The second group most affected by the housing crisis are those on local authority housing lists. Some months ago I highlighted the problem whereby local authority housing lists have increased by 30 per cent since the last housing Estimate in 1996. This is creating chronic problems of overcrowding, hassle in families and the plethora of problems associated with bad housing conditions. We do not see any adequate response in the Government's plan. It is also the case that rents could rocket in the private rented sector as a consequence of this package of measures and the Finance Bill. There is no sign of this in the Bacon report and the Government seems unwilling to recognise the problem. However, we could be discussing a new Bacon type report on the crisis which could emerge in the private rented sector unless we get our act together. It is going to push bills through the roof and lead to more overcrowding within the sector.

The Minister's response lacks measures to deal with the key problem of affordability. If there was a massive increase in house building programmes by local authorities I could believe that there was a commitment by the Minister and the Government to do something about this problem. If I saw the planning legislation which the Minister talks about coming before the House I could say that there was some attempt by the Government to deal with this problem. However, that is not the case.

If one looks at the action plan, after proposals 1 to 6 we see all kinds of waffle such as, "The Minister for Housing and Urban Renewal will consider the scope for the private rented sector in relation to a proposal. The Minister for Housing and Urban Renewal will bring this recommendation to the attention of the appropriate body". One of the recommendations is to increase the staff levels of planning and development departments. The plan states: "Greatly increased financial resources under the new system of local government finance will enable local authorities to devote increased resources to planning development and control". This is not pinpointed or ring-fenced. It is an aspiration as are many of the proposals after No. 7. There is no content. If, at the same time as he produced these measures, the Minister had produced new planning legislation or told us of the plans for the capital house building programme and new start programmes for local authorities I would have said there was a serious effort to deal with the problem of affordability.

The average price of a house in Dublin in 1993 was £59,000. If a couple on average incomes were both contributing they would spend just over 13 per cent of their disposable income on the mortgage. That figure is now 30 per cent. If one is buying a house by oneself the figure is 54 per cent. These figures show no hope for the first time buyer and it is clear that there is little hope offered by the Government's package for the first time buyers.

The real problem with stamp duty is not the tinkering with rates at various house prices. It is that first time buyers need a significant proportion of the cost of the house up front. A deposit of 10 per cent is required. Before April 23 the stamp duty on a £110,000 house was 6 per cent. It is now being reduced to 4 per cent but a 10 per cent deposit is still required. In effect, the rate change is a reduction from 16 to 14 per cent. If the Minister wants to give first time buyers an opportunity to get into the market they now need 14 per cent of the average cost of a house of £105,000 up front. That is the reality for the first time buyers in urban areas.

The Fine Gael proposal would have been pro first time buyers. In abolishing stamp duty it would have had a huge beneficial effect for first time buyers.

A wrong move was made in the budget in regard to capital gains tax. The Minister has proposed changes to capital gains tax in terms of development land over the next four years. When he made an announcement concerning the rate change to CGT in the budget last December for residential property, why did he not specify a number of years? I could understand if he said he was changing CGT for residential properties for a period of two or three years to flood the market with a supply of houses. However, the Minister did not specify any time frame with regard to a move which was generally unexpected. I suspect even his officials did not expect it. Why is it that for one aspect of CGT changes there is a four year time limit while another aspect of CGT changes is open ended? Perhaps the Minister will explain the reason for this.

In reply to a question in the House some weeks ago I was informed that the Government had £35 million to spend on new serviced sites. We have now been informed that the amount will be increased to £85 million which I welcome. Am I correct in believing that the £35 million fund is applicable only for the next three years or is the £85 million to be used over the next three years? When will we get an announcement about that? It is another example of the problem at the core of this document. It is not integrated, it is not comprehensive and does not deal directly with the totality of the problem of the housing shortage and particularly the problem of affordability.

Some weeks ago we had various discussions and arguments with the national press about the first time buyers grant but the Minister's statement does not refer to it. We all accept £3,000 is not a huge sum of money. There has been no increase in the first time buyers grant. Does the Minister want the grant abolished? If the Minister was serious about helping first time buyers he should have made a significant change to the grant and increased it on the basis of a certificate of reasonable value, as in the past. The Minister could specify that new homes be of reasonable value in terms of price and construction.

I will not deal with the broader questions of planning density, development and the role of the regional authorities. The Government has tinkered with the issue and made some changes, most of which could have been put in place in last December's budget. There is a great sense of disappointment among first time buyers. I recognise the Minister's problem but when he had an opportunity to put the resources for first time buyers firmly on the agenda he failed. Coupled with the mistake he made last December on the capital gains tax side for the sale of residential property, this does not add up to anything significant for the housing market. The key problem is one for local authorities. There is a crisis in the local authority sector which has increased by 30 per cent in the past two years and there has not been any response from the Government. While I recognise that something was done, much more needs to be done. We will take this matter up in the weeks and months ahead.

I welcome the proposed changes in stamp duty rates and the containment of section 23 incentives. I welcome the Minister's assurance that for smaller towns section 23 tax designation will be available.

Galway County Council has forwarded a proposal to the Department of the Environment and Local Government for the town of Tuam which I hope will be successful. In the city and county of Galway residential development is proposed for 500 acres of land. The major problem in the city and in the environs is that land has become so expensive that people are trying to get sites outside the city. The type of scheme operated by SFADCo in the midwest and in some towns of County Galway where three housing schemes — two of which were Monivea and Menlough — were built, under the direction of Fr. Harry Bohan, should be promoted as a good example of community housing or a housing co-operative. It is being suggested in Galway that if young couples are to get houses they will have to get land outside the city boundaries and form a co-operative to have houses build. All the infrastructure is available. One does not have to wait for massive sewerage schemes to be put in place before such a housing co-operative can proceed. This was proved by Fr. Harry Bohan and SFADCo. I hope the proposals will ensure that housing co-operatives and housing estates will be available for young couples. I hope Galway County Council will zone some of this land for residential purposes and that this type of housing can be provided.

It is envisaged that the population in Galway will increase from more than 57,000 to 76,250 by the year 2116. That is a challenge for local authorities and the Government. The question of decentralisation which was successful in the 1980s has been referred to. Yesterday, I was at a launch of a report by the Council of the West at Horan International Airport, Knock where we talked about a new deal for regeneration. This report is about the western region and attempts to bring us up to date on the facts and figures concerning rural depopulation. It was pointed out that the three regions — the west, the Border counties and the midlands — which have half the land mass have only one-quarter of the population. To counteract this it is necessary to develop water and sewerage schemes to ensure the infrastructure is available for housing. The GDP has fallen in those regions in comparison with other parts of the country. What the council for the west said yesterday will ring a bell with all of us particularly western representatives who must ensure the infrastructure is in place to ensure the housing schemes are set up.

I welcome the Minister's mention of such regeneration in his proposals and I hope we have more success introducing these housing schemes to rural areas.

I am not sure whether the most useful thing would be to use the remaining hour in a Committee Stage format because some Deputies wish to contribute to the general debate which was curtailed at 7 p.m. I will ask the Minister a couple of questions rather than taking him through the resolution paragraph by paragraph. When he rescheduled stamp duty for residential property did he consider not making it cumulative? As it is structured, a house costing less than £60,000 is exempt but a house costing £60,001 is liable for stamp duty for the full amount rather than just the amount over the limit. A more normal way to structure stamp duty would be to apply it only to the amount over the £60,000 limit. This seems a peculiar way to reschedule stamp duty and it will distort the market. There are a series of limits in the schedule and if a house costs slightly over a limit, that portion above it will be paid under the table in cash.

Deputy Noonan and I have spent too long in the real world.

The Minister knows what will happen — people will try to go under the threshold rather than over it and this will create a difficulty. When it came to restructuring, what was the thinking behind choosing that arrangement rather than the more straightforward one which I suggest?

Is the Deputy suggesting an exemption threshold?

It is more like a rate threshold.

Like in income tax personal allowance rates?

Yes. It seems to make more sense than paying duty on the whole amount when going over the threshold. I know this has grown up historically but when the Minister went to the trouble of restructuring he might have introduced a more understandable application of stamp duty.

Could the Minister comment on Part I, paragraph (7) of the Schedule, dealing with non-residential property? He is applying an exemption of up to £5,000, a 1 per cent rate up to £10,000, etc. Perhaps he could inform the House how this is changed from the existing provision. The schedule of stamp duty which will apply to residential property has been well explained and publicised, but the schedule for non-residential property applies rates of 1 per cent, 2 per cent and 3 per cent to different values. Is he introducing new provisions or reinstating the existing provisions? Could he do the same on Part II of the Schedule, dealing with the arrangements for leasing — in other words, is he reinstating the present position or introducing new law and a new regime?

In the resolution itself, could he indicate how one computes the stamp duty on a shop with owner occupied residential accommodation above it? For instance, if the owners of a pub lived over it and the building was sold, how would the stamp duty be computed? Alternatively, how would stamp duty be computed on a shop or pub, over which there was a flat which was not owner occupied but rented out? What happens if a builder, rather than selling a completed house for a particular price, divides it into two transactions — selling the site and then charging the cost of building the house? The Minister will be aware that practice occurred about ten years ago; the loophole in that regard was closed but was that closure carried into the resolution? If the transaction is split, how will stamp duty be computed under the new regime in these two instances: first, if the house is owner occupied; and second, where the house is rented?

I will deal with Deputy Noonan's questions first and then return to those raised in the generality of contributions. Some of these questions are quite technical. The Deputy suggested applying to stamp duty a regime similar to that for income tax personal allowances. The reason for not doing so is the cost, which would be of the order of £50 million per annum . Stamp duty earns considerable revenue for the Government and the cost of introducing such thresholds — which I am sure Dr. Bacon considered — would be enormous. The advantage of the stamp duty regime as it currently applies is that when the house price is above a threshold the duty kicks in at a certain rate and the State gets the full yield. The Deputy knows it is costly to increase personal allowances in the income tax code; it is equally costly to do it in the stamp duty code.

Did the Minister's officials compute a schedule of stamp duty on the basis I am suggesting which would cost the same amount as the Minister's proposals?

Bacon and Associates approached this from the viewpoint of freeing up the second hand market. Their report proposed a schedule of new stamp duty rates. Up to now, stamp duty applied to all transactions. This measure is doing what Dr. Bacon proposed — putting a partition between stamp duty on residential property and stamp duty on other property. His theory is that rebalancing the stamp duty rates will free up the supply.

The Deputy will note we made small adjustments to the rates Dr. Bacon proposed, such as different cut-off levels for the 3 per cent rate which we thought would be better. We did not look at it from the viewpoint of a revenue earner; between ourselves and the Department of the Environment and Local Government we thought the gaps specified by Dr. Bacon were too wide and that it was fairer to do it in the other direction. I think most people recognise that. He approached this problem from another angle.

As the Deputy will know, on Committee and Report Stages of the Finance Bill, he and I put forward ideas about stamp duty practices. I am of the view that a lot of this money will go to the seller, which is a difficulty. I recognise the potency of Dr. Bacon's argument — he maintains that the rebalancing of stamp duty since the introduction of residential property tax and the outgoing Government's imposition of new rates has stopped the flow at the higher end, discouraged people from trading upwards, and slowed down the market, which is why he talks of rebalancing it this way. I have not met Dr. Bacon, either when I was in Opposition or in Government. I did not even speak to him when I was a member of and he was a consultant to the Select Committee on Finance and General Affairs. However, from reading his report I can see the line he took on that matter.

On Part I, paragraph (7) of the Schedule Deputy Noonan raised an interesting question about splitting a pub or shop from the residence above it. An explanatory note to be issued by the Revenue Commissioners tomorrow will deal with this point. For the benefit of Deputies and Senators, 98 per cent of whom — myself included — know little about stamp duty, it states:

In a mixed property situation, however, the residential part will no longer be aggregated with the non-residential part for the purposes of determining the appropriate rate of stamp duty. A mixed property includes a property part of which is residential and part non-residential (e.g. living quarters over a shop) or two or more properties one of which is residential and the other non-residential (e.g. a shop and a house).

Example: A building is bought for £500,000. It comprises a retail shop at ground floor level and residential apartments overhead. The amount of the consideration attributable to the residential apartments is £200,000. Stamp duty will be chargeable on the conveyance as if two separate properties were being conveyed. The residential apartments will attract duty of 5 per cent on £200,000 and the non-residential part will attract duty of 6 per cent on £300,000.

Example: Two separate premises are bought as part of a larger transaction — one is a house and the other is a bakery. The consideration is £45,000 for the house and £55,000 for the bakery. The house will be exempt because it is under the threshold. Duty of £2,750 will be chargeable on the bakery (£55,000 × 5 per cent).

Example: Two separate premises are bought as part of a larger transaction — one is a shop with living quarters overhead and the other is a house. The consideration is £30,000 for the living quarters and £45,000 for the shop. The consideration for the house is £65,000. Stamp duty is chargeable as follows:

—living quarters (£30,000 × 3 per cent as the aggregate consideration for the residential property is £95,000)

—shop (£45,000 × 4 per cent — no aggregation between non-residential and residential property)

—house (£65,000 × 3 per cent as the aggregate consideration for the residential property is £95,000).

I am sure the explanatory note will be of great benefit to members of the solicitors' profession.

The Deputy referred to paragraph (7) of Part I of the Schedule. Paragraphs (1) to (6) introduce the new rates for residential property while paragraphs (7) to (13) reimpose the existing 1 per cent to 6 per cent rates for non-residential property.

There is no variation in the Schedule.

No. Would the Department of Finance dream of doing such a thing? The opportunity has not been availed of. The principle of partition between residential and non-residential property applies. Paragraph (14) provides relief for transfers between close relatives.

Paragraph (a) of Part II of the Schedule, which deals with leasing, introduces the new rates applicable to residential property while paragraph (aa) reimposes the rates of 1 per cent to 6 per cent for non-residential property. The same principle applies.

In the past the proposal that the stamp duty structure should be changed in line with the income tax structure was examined but it was considered that the cost to the Exchequer, of the order of £50 million, would be too high. Dr. Bacon did not come at the problem from that angle, rather he approached it with a view to freeing up the supply side. Each Member has an opinion on whether some of the measures proposed will achieve this. The Deputy knows my opinion on the stamp duty changes. He made a good case on Committee and Report Stages for acceptance of his own proposals which were the subject of an interesting debate. I share his view that in the longer term market forces will decide all these matters. I am a marketeer not alone in this area but in many others also. Dr. Bacon recommended that, through a combination of forces, the market should be tweaked to free up the supply side. That is what the Government is trying to do.

The proposed changes to stamp duty charges represent an important first step to arrest house prices which are spiralling out of control. I got the distinct impression listening to Deputy Hayes that the problem started after 26 June last year. Prices have been rising for a number of years. The previous Government had ample opportunities to do something about it during its term of office. This is an excellent proposal.

When we come to discuss the Bill to be introduced in the next couple of weeks I hope the Minister will consider extending the first-time buyer's grant to second-hand houses. I disagree with a number of the proposed measures because they do not go far enough and perhaps will damage another part of the industry. I am referring specifically to the disallowance of interest offset against rental income.

We are dealing with stamp duty but I will allow a brief reference to other issues.

We will have an opportunity in a fortnight's time to discuss this matter again——

The Deputy will have an opportunity to discuss it when the legislation comes before the House.

I will reserve my comments, including on where the blame lies, until then.

I do not have a problem with the supply side proposals made by Dr. Bacon. In general, as a package, they will probably increase the supply of building land available. I do not think he could have done much else. The point which has been missed is that supply and demand are not two separate entities but are inextricably linked. The penalties which the Minister is applying are an attempt to increase supply by restricting demand; for example, by removing the private investor from the new house market by imposing stamp duty and disallowing interest as a relief.

If a builder builds 150 houses in my town, 40 per cent of them will be bought by small investors. The theory is that those 150 houses will now be available to owner occupiers, especially first time buyers. However, in practice the builder will reschedule his building programme and rather than building 150 houses in 12 months he will build them over a year and a half or two years. He will effectively wind down his supply to meet the demand.

It is a fallacy to think that building activity will remain at current levels after this package is introduced and that it is possible to build on present activity to increase supply. Interfering with the demand side automatically interferes with the supply side. I am extremely worried, especially by the provision that interest relief will no longer apply to small investors——

I would prefer if the Deputy confined his remarks to stamp duty.

The Minister did not answer my question — I was just reflecting on his reply. How will a situation where the site transaction is split from the building transaction be computed, first, if it is owner occupied and, second, if it is rented?

I thank the Minister and Dr. Bacon for bringing forward these proposals for action on house prices. I welcome the proposals, by and large, but I have some concerns which time constraints will not allow me to discuss in detail.

I welcome the proposals in regard to supply. However, in regard to the tax relief on borrowing for residential investment, will the Minister agree that the payment, prior to the announcement, of a deposit on a property for such use should be seen as a contract? Such payments were made under the then law and it would be only fair to permit their being regarded as a binding contract. Contracts can have opt out clauses and the payment of a deposit should be regarded as a contract.

I have some concerns in regard to section 23 but——

I would prefer if Deputy Callely dealt with the issue of stamp duty. Three other speakers are offering and I would like to facilitate them.

I greatly welcome the reduction in stamp duty rates. I have already tabled questions in this regard to the Minister, but I ask him to acknowledge the level of house prices in the greater Dublin area, as was highlighted in the Bacon report. I welcome the zero rate of stamp duty for houses up to a value of £60,000 but there are no such houses available in the Dublin area. I ask for the introduction of a special measure to recognise the price of houses in the Dublin area.

The Minister stated that this exemption for houses worth under £60,000 would have an effect on first time buyers, which it might do in rural areas. However, I ask him to abolish stamp duty on all houses bought by first time buyers in the city area because of the lack of new housing.

I ask the Minister to take those two points on board, particularly given the current situation in Dublin.

In regard to the issue of split transactions raised by Deputy Noonan, the purchaser will be either an investor or an owner occupier, which will decide the category into which he falls.

Deputy Noonan's analysis of the situation was a very good intellectual argument and I agree with much of it. However, the proposals in the Bacon report are a short-term attempt to allow first time buyers an opportunity to enter the market. The price increase resulting from supply and demand being out of sync has prevented owner occupiers from entering the market.

The measures in the Bacon report will have a depressing effect on investors entering the market. According to economic theory, that should allow owner occupiers to enter the market because builders will have to reduce their prices — or, at least, not increase them — as a result of not being able to sell houses to investors.

Deputy Noonan made his points very well. He is a practical person from County Limerick and I am a practical person from County Kildare and we both have views on the matter. That should be the result of the package of measures, according to economic theory, but we will have to wait and see. The intellectual rigour of Deputy Noonan's argument is quite compelling and I do not greatly disagree with it but we will have to see what happens.

The Minister does not have to worry — I am not calling a vote.

What we are now seeing is a symptom of the problem forecast by rural Deputies some years ago when we said the IDA was directing all industry towards Dublin. Some of the biggest electronics firms in the world are now located in Dublin and there is a very buoyant financial services centre. As a result, some people are earning very high wages in Dublin and they are prepared to pay high prices for houses. The only way——

Deputy Deenihan is correct that the biggest factor is the growth in the economy and higher incomes.

As people's families grow and salaries increase they want bigger houses in more exclusive areas and there is constant mobility in the housing market. The only way to meet that demand is by supplying more houses. It is possible to offer incentives but house prices will only reduce in the long run if there is a glut of houses on the market.

The Minister has always been very forthcoming and flexible in these matters, probably much against the advice of his civil servants at times. In north Kerry we are trying to encourage people to build houses and to increase both supply and demand. We have a seaside resort scheme in Ballybunion. I am not exaggerating when I say I received a large number of calls this evening from people in Ballybunion who are worried about the implications of the changes in section 23 in relation to the seaside resort scheme.

I would prefer if the Deputy confined himself to the issue of stamp duty. There will be an opportunity to discuss this matter in a few weeks' time.

Will the Minister clarify this matter?

While I like bacon, including bacon sandwiches, I do not like the Bacon report. The Minister has not dealt with tax breaks. He should have looked after people on middle incomes and first time buyers. He should have abolished stamp duty up to a threshold of £100,000 for the first time buyer. I am disappointed that there are no initiatives for young couples starting off.

The tax breaks, including those for seaside resorts and section 23, enable speculators to have five or six houses while young couples on middle incomes cannot buy one house. The Minister should have allowed local authorities to provide free sites to couples on the basis that if they sold on within ten years they would reimburse the authority in some way.

I do not know how much the Bacon report cost. The Minister should have consulted Deputies, urban councillors and people in public life. I am an auctioneer and have been a member of an urban council since 1979. I could have swiftly resolved this problem.

All Governments have looked after the rich and neglected the poor. I am disappointed the Minister did not introduce initiatives to help those on low and middle incomes. These measures are no use to them. They only protect the rich, including people with three and four houses. Young couples cannot buy houses or sites in Westport, Castlebar or Ballina, yet the Minister will not provide money to local authorities to provide houses for them. I am fed up with section 23 tax breaks. Last week's Sunday Independent revealed what is going on. There is nothing in these measures for poor people.

I cannot disagree with Deputy Ring, nor can I disagree with the Minister when he said it is a market led matter. Supply and demand will dictate the price of houses, as it does in most other matters. The Government has decided to distort demand without first dealing with supply. Mr. Bacon will have to be grilled to get a substantial package in place before attempts are made to deal with stamp duty or section 23 tax breaks.

As an example of how the stamp duty changes are affecting matters, a friend of mine sold a modest family home in Dublin for £130,000 last week. Today he has been inundated with offers of a further £20,000 on that price. He is trading up to a £250,000 house, which is not a major development in this city, and he will save £10,000 on what he is buying because of the changes to stamp duty. He will, therefore, have made £30,000 in a few days.

Given the restrictions to be imposed on the supply of houses and apartments, the house rental sector will be chaotic in the autumn and beyond. If we restrict those with money in investing in property we will create a problem in the rental sector while we pay £1 million per week in supplementary allowances to health boards alone to give people rental income. Yet, penal additional rentals will be imposed on those seeking rented accommodation from the end of this year and beyond, and especially from the time students return to college in the autumn.

Deputy Hayes made some interesting comments on the supply side, densities and various others aspects of planning, which are matters for my colleague, the Minister for the Environment and Local Government. I will let him deal with those proposals on another date. He commented that my officials did not expect the change to the capital gains tax. I do not think I will do anything in the Dáil or elsewhere that would surprise my officials. I gave my views on capital gains tax on all Stages of the Finance Bill and had very interesting discussions with Deputies Rabbitte, Noonan, McDowell and others.

Deputy Michael Kitt referred to the principles of tax designation. The changes made in the Finance Bill regarding section 23 are adequate and ring fenced. One of the reasons the Bill was so large was because of the parts which related to urban and rural renewal. The Minister for the Environment and Local Government will introduce his proposals on the new urban renewal schemes in the middle of the year. When the integrated plans are studied they will be considered by the evaluation committee and proposals will eventually be made.

The Finance Bill changed the rules for section 23. Whereas in the past, blanket tax incentives applied to all areas of urban designation, section 23 relief will not automatically apply. In line with the Bacon report, before section 23 relief will apply in a new integrated area plan, urban designation will be rigorously applied and only in very exceptional circumstances. Proposals made by the Minister for the Environment and Local Government must be sanctioned by the Minister for Finance. The drawback with this is that, although I have confidence in my ability to say ‘no', the Minister for Finance will be inundated with proposals on the urban renewal scheme. There will, therefore, be a significant change regarding urban designation when the new scheme commences.

Most of Deputy O'Flynn's comments were on the Finance Bill. I hope to publish the Bill next week and have all Stages debated by the following week. It will not be a large Bill. All measures regarding stamp duty will be repeated in the Bill, but the changes will not be significant in so far as people will be aware of them. I do not have a problem with the Deputy, or any other member of my party, disagreeing with proposals made by the Government. I spent most of my political life disagreeing with proposals made by my party.

Most of the points raised by Deputy Callely, including the disallowability of section 23, can be addressed when we debate the Finance Bill. Deputy Deenihan referred to the seaside resort renewal scheme. By definition, a holiday home under this scheme would not be a main residence. The non-deductibility of interest will not apply to investors in rented residential houses in the designated seaside resorts, for example holiday cottages in such resorts, some of which are in Deputy Ring's constituency. This is because such houses are not eligible under the seaside resorts scheme for owner occupiers.

Significant changes were made some years ago before the introduction of the seaside resort renewal scheme. People were able to build holiday cottages and claim tax relief.

The same rule applies to holiday cottages. The non-deductibility of interest, even though this matter will be covered in the Finance Bill, will not apply to rented residential houses in seaside resort areas.

Deputy Ring asked why we did not go down the route of having the exemption limit in regard to stamp duty and I dealt with that in great detail when replying to Deputy Noonan's point. The Government acted on foot of the Bacon report. There is no point in having a dog and barking oneself. That is not to say we should implement all the recommendations in a consultant's report. Most Governments and politicians have often taken refuge in saying they will introduce a measure because a consultant or someone else recommended it, but I do not believe in doing that. The Government regarded the package of measures brought forward by Bacon as the appropriate route to take.

I am not surprised at what Deputy Hogan said about his friend who has a house. I would have made that point to Deputy Noonan on Committee Stage of the Finance Bill and I made it earlier in this debate. I presume some of that will happen regarding stamp duty. The package of measures brought in by Bacon and on which the Government is acting is intended to distort demand. Deputy Hogan's comments about supply and demand are correct.

Will the Minister look at the booking deposit?

As it is now 9.30 p.m. I am required to put the following question in accordance with an Order of the Dáil of this day: "That the Financial Motion by the Minister for Finance is hereby agreed to".

Question put and agreed to.
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