Financial Resolution No. 3: Stamp Duties - Section 126AA Bank Levy

I move:

(1) THAT section 126AA of the Stamp Duties Consolidation Act 1999 (No. 31 of 1999) be amended in subsection (6) by substituting “170 per cent” for “59 per cent”.

(2) THAT paragraph (1) of this Resolution shall apply in relation to a statement to be delivered in accordance with section 126AA(2) of the Stamp Duties Consolidation Act 1999 for the year 2019 and each subsequent year.

(3) 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).

Financial Resolution No. 3 amends section 126AA of the Stamp Duties Consolidation Act 1999, which imposes an annual levy on certain financial institutions for each of the years to 2021, inclusive, on the basis of the amount of deposit interest retention tax, DIRT, paid by them in a defined base year. Members will recall that in budget 2016 the Minister for Finance announced that he intended to extend the levy for a further five years to 2021. This would bring in an additional €750 million over the period of time. This was to be subject to a review of the methodology used for calculating the levy. The year 2015 was the base year for the levy in the years 2017 and 2018. Section 126AA provides that 2017 is the base year for the levy payable this year and for next year, 2020. This measure will increase the rate at which the levy is charged from 59% to 170% of the deposit interest retention tax collected by the relevant financial institution within that base year. The higher rate reflects the fall in interest rates, and hence DIRT, since 2011.

The new rate, combined with the 2017 base year, will preserve the existing contribution of €150 million paid by the affected financial institutions. In this regard, the financial resolution is being proposed tonight to ensure that the €150 million bank levy receipts due in under two weeks' time, on 20 October, are raised. This has been flagged already and will not come as a surprise to Members. The Minister for Finance announced his intention in May of this year.

I will now discuss Financial Resolution No. 4, which will increase the rates of stamp duty on non-residential property.

In doing so, I remind the House that Financial Resolution No. 4 provides for an increase in the rate of stamp duty applicable to non-residential property by 1.5%, with effect from midnight. It will, therefore, increase from 6% to 7.5%. The commercial property market continues to perform strongly, and it is expected that this increase can be borne by the sector without any real or significant impact. Based on Revenue's ready reckoner, it is estimated that this will generate an additional €141 million in a full year, assuming no behavioural changes. The measure provides for transitional arrangements whereby the existing 6% rate will apply to instruments executed before 1 January 2020 where a binding contract existed prior to today. It also provides for the maintenance of the stamp duty rate of 2% currently applicable in respect of the refund scheme for land converted to residential use. As this is primarily a revenue-raising measure, and in order to ensure that it does not distort the level of activity for the remainder of the year, it has been made subject to this Financial Resolution.

Financial Resolution No. 5 amends Part 5 of the Stamp Duties Consolidation Act 1999 in respect of company acquisitions to provide that a stamp duty of 1% is applicable where a scheme of arrangement that involves a so-called cancellation scheme in accordance with Part 9 of the Companies Act 2014 is used for the acquisition of a company. The need for this measure arises due to it having been established that, in certain circumstances where a company is restructured in accordance with a scheme of arrangement under Chapter 1 of Part 9, no stamp duty currently applies. Under such an arrangement, the company being acquired cancels its existing shares and reissues new shares to the acquiring company. This is known as a cancellation scheme. Currently, no stamp duty is payable in such circumstances, as there is no transfer or conveyance on the sale of shares, which would give rise to stamp duty of 1% on acquisition. This measure is being made subject to this Financial Resolution in order to ensure that it has immediate effect. In doing so, it ensures that the maximum revenue is protected for the Exchequer.

In light of the number of Deputies offering, we might try for two minutes each maximum.

In facilitating this budget under the confidence and supply agreement, it was crystal clear to us that some measures did not give adequate cognisance to the impact on people. We will support Financial Resolutions Nos. 3 and 5, which we view as technical adjustments to, respectively, maintain the €150 million yield on the bank levy and fill a loophole so that companies being sold or purchased will be subject to stamp duty of 1%, which is an important revenue-raising measure, albeit the Government is not in a position to give an estimate of how much.

Regarding stamp duty on commercial property under Financial Resolution No. 4, while I take the Minister for Justice and Equality's point that the commercial property sector is strengthening and may be well placed to sustain such an increase, we have major concerns in this regard about the ability of the agricultural community, in particular small farmers who would not qualify for the reliefs available to family members. Will the Minister clarify the situation and how the Government will mitigate yet another impact on the farming community, which is in a time of crisis, as mentioned in many dispatches in the Chamber today? While facilitating, reluctantly, the budget under the confidence and supply agreement, we will not be voting for this measure.

I have a similar concern regarding the transfer or sale of land by, in particular, small farmers who might have the opportunity to purchase small holdings adjacent to their existing holdings. The rise from 6% to 7.5% will adversely impact on possible sales and what may be necessary increases in farm sizes. Similarly, an increase from 6% to 7.5% when purchasing or acquiring a site for a house is an unnecessary burden. The Minister has been provided with a brief that will say that people can get some of that charge subsequently reimbursed, but that route is not always available. I hope the Minister will give a commitment that this matter will be reviewed during the debate on the Finance Bill, particularly as it affects smaller landowners and people who have an opportunity to acquire a site to build a house in rural Ireland.

Financial Resolution No. 3 proposes a technical change to update the year on which the calculation of the bank levy is based. This measure's outworking is that the banks will continue paying the same amount and the State will receive the same revenue. We in Sinn Féin wanted the levy increased and the corporate tax breaks that banks get done away with because we believe that they should pay their fair share. When discussing the carbon tax, the Minister for Health stated that we had dismissed any notion of a carbon tax increase. We did not. We are not calling for the existing carbon tax to be scrapped. Rather, we have concerns about the increase because it is regressive. In the same way, I could argue that the Government could have increased the bank levy and raised revenue to invest in necessary climate action measures. All of this is about choices.

We support Financial Resolution No. 3, as limited as it is, but we would have wanted it to be different. The same can be said of the stamp duty increase. While we welcome the increase, we would have wanted it to be even larger. We had proposed an increase of 4% this year, which would have raised commercial stamp duty from 6% to 10%. I suppose our quarrel on this one concerns the amount, not the principle.

I also wish to speak on Financial Resolution No. 3. I have the same perspective as the Sinn Féin Deputy, but I have come to a slightly different conclusion, in that it is wholly inadequate. This is a technical amendment just to hold still on the bank levy. We are going to get €150 million from the banks next year by way of a levy. These are organisations that, individually, are making up to €1 billion in profit. They are writing their corporate tax off against the losses that we as a people bailed out. After we have sold off the bank shares and got what we can, it is estimated that there will be a hole left of approximately €40 billion in debt owed by the banking system to the people of Ireland. That is unfair, especially when a budget is presented that does not give any cost of living increase to people on basic welfare. If the Government increased the bank levy in the way we have suggested from €150 million to €400 million, it would be able to put in place a comprehensive package of social welfare to indemnify the most vulnerable in our community next year against not only the expected inflation cost of 1.5%, but the potential whammy of a no-deal Brexit.

I ask the House to consider rejecting Financial Resolution No. 3, which is a technical "stand still" suggestion. Obviously, we cannot table an amendment because we are not allowed to table an amendment that increases a tax, but I ask that the Government, if the House rejects the resolution, revert to us with a resolution that would give a robust package that would be fair to the people of Ireland who bailed out the banks and suffered incredibly because of bank foolishness and would require the banks, with a view to social justice, to pay their fair share.

I am opposed to the proposed increase in Financial Resolution No. 4 in respect of non-residential properties, which will affect farmers.

The farmers are badly enough off, as was outlined earlier today. We all know that for farmers to continue to exist they must invariably buy a bit of land to increase production and stay in the race. For that reason, I oppose Financial Resolution No. 4. It would also affect young people buying a site from a farmer or landowner. In addition, it would affect developers buying a larger site to build more houses. All that would happen then is that the price of the house would increase to the young man or woman who wishes to buy a house to make a home for themselves. I am opposed to the measure.

Likewise, I am not happy with Financial Resolution No. 3. We all know the banks were bailed out by the people of this country and they seem to be getting away lightly. I do not think that is right.

Last year the rate was increased to 6%. The people who were most affected were not those on the commercial side and the large conglomerates. We talked then about the small person in business and the smaller farmer. Today, in Financial Resolution No. 4, 1.5% is added to the 6%. I know the Minister will say that is not the case for those with the green certificate, those under 35, if one is consolidating a holding or if the transaction is from one family member to another. We know all of that, but the reality is that an allowance should have been made for small farmers to help them to sustain the family farm, regardless of where they are in the country, who have between 40 acres and 60 acres and who want to buy 20 acres. Last year and once again this year, they get a kick in the teeth. If people buy 20 acres of land, for every €100,000 there is another €1,500 gone out of their pocket due to the increase. An allowance should have been included. I understand from what Deputy MacSharry said that Fianna Fáil is opposing the measure and the party will hopefully vote against it. That should be done.

I said I was not voting for it.

Deputy MacSharry said he is opposing it, but I suppose Fianna Fáil Members will sit on their hands. Hopefully, something can be introduced to give an option to the small farmer for transactions up to €200,000 because we are playing into the hands of the big conglomerates all the time.

The stamp duty increase for non-residential property is a fiercely blunt tool. It treats vastly different sectors of the non-residential property market exactly the same. On one side, one has phenomenally profitable flipping of commercial property and on the other side one has the farming sector, which is stuffed at the moment, where the average wage is €8,000 a year and where subsidies make up approximately 150% of the income of some farmers, yet those two vastly different sectors are being treated with exactly the same blind, blunt tool. I urge the Minister to examine it. This must have been a mistake. I cannot imagine for a moment that it was done on purpose by any person with an understanding of rural Ireland.

The bank levy is pocket money to the banks in this country given the level of profit they are making. These are phenomenally profitable organisations and they only exist because of the blood, sweat and tears of the Irish people. It is incredible that the raison d'être of this Government has been the protection of the banks in everything it has done. It has deleted competition from the pillar banks so that they can be protected. It has made sure that the banks do not have any competition from other companies in the market. It is now beyond time that the banks paid their fair share the same way as anybody else. They are certainly not doing it with the bank levy.

I wish to make a few points on the stamp duty change. As has been said, it will take money from small farmers who decide to sell their land and retire. When one considers that 18 months ago the stamp duty on commercial property was 2% and today it is 7.5%, I honestly think it is a penal tax. It is very unfair and it will affect people with a small business who want to sell it and retire. The person purchasing the business will deduct 7.5% straight off the top from the very beginning. It is a penal tax and it was high enough at 6%.

Perhaps the Deputy will vote against it.

It is a mistake and it will affect small businesses and small farmers.

I wish to add my voice to the debate. The Minister said he feels the commercial sector can cater for this increase. On what basis does he have that feeling? What economic impact assessment has been carried out on the proposal before the increase was introduced? As Deputy Scanlon said, it is not just a 1.5% today, it comes on top of the 4% increase from last year. In the space of just over 12 months, we have gone from 2% to 7.5% and that will have an effect on small farmers and small businesses, people who are creating jobs and opportunities in rural Ireland and in the regions. Once again, the Government is putting an additional charge on their back. While the Minister is looking to increase the rate by 1.5%, thank God Sinn Féin is not in government because a previous speaker from the party said earlier they want to increase it even further and to put additional charges on the agriculture sector and small businesses. The fact of the matter is that since Fine Gael came into office following the most recent general election, the cost of doing business in this country has become more expensive. We have fallen down the international league table in terms of the cost of doing business. We have also fallen down the league table in terms of competitiveness. That is one of the reasons that has happened. We are out of synch with the transactional tax with other European countries. I am interested to learn what economic impact assessment has been carried out on the proposal.

I wish to add my voice to what others have said, in particular about the transfer of land for agricultural purposes from one farmer to another. A solution was found previously when stamp duty was introduced and an exemption was given to young farmers. I respectfully suggest that in the Finance Bill a similar solution would be found to offset this impact, particularly on the sale of agricultural land from one farmer to another.

A number of questions were asked on a variety of issues contained in the financial resolutions. There having been no adverse comment on Financial Resolution No. 5, I do not intend to say anything further on that because I gather from the silence of Opposition Deputies that they are accepting of it. That reduces the debate to the area of the stamp duty increase of 1.5% and the banking levy.

I will respond first to the comments of Deputy MacSharry, who was ably assisted by Deputies Smith, Troy, Tóibín, Fitzmaurice and Danny Healy-Rae in respect of the stamp duty increase. I assure the Deputies that all of the current reliefs that are in existence for agricultural land will still be available. In respect to the purchase or transfer of agricultural land, I refer to the exemption for young, trained farmers, as mentioned by Deputy Breathnach, the farm consolidation relief, which rural Deputies will be particularly apprised of, in addition to the consanguinity relief, which to my mind will cover many of the instances put forward by the Deputies. In respect of non-residential commercial land, the increase is of the order of 1.5%. That is a stamp duty that was 9% not so long ago.

I will answer Deputy Troy's question by stating that there was an impact assessment. The Department of Finance consistently monitors sectoral elements of the economy and keeps all tax measures under review as appropriate. There was a specific assessment regarding activity in the commercial property sector. The observations were to the effect that the commercial property sector remains positive, with few signs of adverse impact as a result of stamp duty measures introduced in budget 2018. The Department contends that the favourable yield on offer to investors in the Dublin market, the continuing number of planning permissions granted for non-residential units, and the high volume of office space under construction all suggest that the slight increase in the rate of stamp duty would not lead to a significant decrease in investment. I mentioned that the agricultural reliefs are still remain intact. That covers the vast majority of land transfers in the agricultural sector.

Turning to the bank levy, I acknowledge the point raised by Deputy Howlin on behalf of his party, as well as by Deputy Tóibín. Both Members will be familiar with the ongoing debate in this sector. They will also be aware that the Minister considered a number of options, with particular reference to a proposed increase in the levy and that increase would be on a permanent basis. This was the subject of debate here in the House from time to time at parliamentary Question Time and also in more general finance debates. I repeat, however, that it is the view of the Minister and his Department that there are several strong reasons not to increase the yield further and to ensure that it remains at the current €150 million yield. It is important we ensure that the full cost does not fall on consumers through higher interest rates on loans and higher banking fees. Those are outcomes that would result if the yield were higher.

Another valid point is that a substantial increase would also raise the likelihood of a legal challenge to the bank levy. I state that given the fact that, for example, credit unions are currently exempt and do not make payments.

They did not get a bailout.

There have been suggestions that such a legal action might have an unintended consequence for us here as it may be a revenue issue. We have also seen that banking sector competition has resulted in something of reduction in their numbers. At least one bank has left the Irish market, citing specifically the bank levy as a factor that contributed to such an exit. We do not want to include the credit unions nor do we think it desirable that An Post should be included in the levy.

None of them got a bailout.

With that in mind, it is the view of the Minister of Finance, as has been flagged on a number of occasions and, therefore, should not come as any surprise to Deputies, that he would leave the levy yielding the current sum of €150 million.

Question put: "That Financial Resolution No. 3 be agreed to."
The Dáil divided: Tá, 93; Níl, 35; Staon, 0.

  • Aylward, Bobby.
  • Bailey, Maria.
  • Barrett, Seán.
  • Brassil, John.
  • Breathnach, Declan.
  • Breen, Pat.
  • Brophy, Colm.
  • Browne, James.
  • Bruton, Richard.
  • Burke, Peter.
  • Butler, Mary.
  • Byrne, Catherine.
  • Byrne, Thomas.
  • Cahill, Jackie.
  • Calleary, Dara.
  • Canney, Seán.
  • Cannon, Ciarán.
  • Carey, Joe.
  • Casey, Pat.
  • Cassells, Shane.
  • Chambers, Jack.
  • Chambers, Lisa.
  • Corcoran Kennedy, Marcella.
  • Cowen, Barry.
  • Creed, Michael.
  • Curran, John.
  • D'Arcy, Michael.
  • Daly, Jim.
  • Deasy, John.
  • Deering, Pat.
  • Doherty, Regina.
  • Dooley, Timmy.
  • Doyle, Andrew.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Fitzpatrick, Peter.
  • Flanagan, Charles.
  • Fleming, Sean.
  • Grealish, Noel.
  • Griffin, Brendan.
  • Halligan, John.
  • Harris, Simon.
  • Harty, Michael.
  • Haughey, Seán.
  • Heydon, Martin.
  • Humphreys, Heather.
  • Kehoe, Paul.
  • Kenny, Enda.
  • Kyne, Seán.
  • Lahart, John.
  • Lawless, James.
  • Lowry, Michael.
  • MacSharry, Marc.
  • Madigan, Josepha.
  • Martin, Micheál.
  • McConalogue, Charlie.
  • McEntee, Helen.
  • McGrath, Finian.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • Mitchell O'Connor, Mary.
  • Moran, Kevin Boxer.
  • Moynihan, Michael.
  • Murphy O'Mahony, Margaret.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Murphy, Eugene.
  • Naughten, Denis.
  • Naughton, Hildegarde.
  • Neville, Tom.
  • Noonan, Michael.
  • O'Brien, Darragh.
  • O'Callaghan, Jim.
  • O'Connell, Kate.
  • O'Dea, Willie.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • O'Keeffe, Kevin.
  • O'Loughlin, Fiona.
  • O'Rourke, Frank.
  • Ó Cuív, Éamon.
  • Phelan, John Paul.
  • Rabbitte, Anne.
  • Ring, Michael.
  • Rock, Noel.
  • Ross, Shane.
  • Ryan, Eamon.
  • Scanlon, Eamon.
  • Smith, Brendan.
  • Smyth, Niamh.
  • Stanton, David.
  • Troy, Robert.


  • Adams, Gerry.
  • Brady, John.
  • Broughan, Thomas P.
  • Buckley, Pat.
  • Collins, Joan.
  • Collins, Michael.
  • Crowe, Seán.
  • Cullinane, David.
  • Ellis, Dessie.
  • Ferris, Martin.
  • Fitzmaurice, Michael.
  • Funchion, Kathleen.
  • Healy-Rae, Danny.
  • Healy, Seamus.
  • Howlin, Brendan.
  • Kelly, Alan.
  • Kenny, Martin.
  • McDonald, Mary Lou.
  • Mitchell, Denise.
  • Munster, Imelda.
  • Murphy, Catherine.
  • Nolan, Carol.
  • O'Reilly, Louise.
  • O'Sullivan, Jan.
  • O'Sullivan, Maureen.
  • Ó Broin, Eoin.
  • Ó Caoláin, Caoimhghín.
  • Ó Snodaigh, Aengus.
  • Pringle, Thomas.
  • Quinlivan, Maurice.
  • Ryan, Brendan.
  • Sherlock, Sean.
  • Shortall, Róisín.
  • Stanley, Brian.
  • Tóibín, Peadar.


Tellers: Tá, Deputies Seán Kyne and Tony McLoughlin; Níl, Deputies Brendan Ryan and David Cullinane.
Question declared carried.