Did the two volume telephone book I received contain a restatement of the stamp duty law or will it be done separately?
SECTION 89.
Question proposed: "That section 89 stand part of the Bill."
We will finish consolidation of the tax law in the area on which we have focused, corporation tax, related income tax and so forth. Stamp duty is the next area we will examine. The experience of consolidating the law has been most illuminating in terms of the efficiency with which it has been done by using both Revenue Commissioners personnel and outside consultants and from the point of view of cost and time. At the official launch last week in Dublin Castle, the informal view of Commissioner Quigley was that we are now in a position recast their estimates of the length of time required for the task. Stamp duty or VAT will be next.
Some of the people sitting near the Minister had a big role in consolidating the material.
Absolutely.
Section 89 introduces the new stamp duty rates of 7 per cent, 8 per cent and 9 per cent on residential property.
Yes, and it is not working because the housing market is still overheated.
I am amazed at that. This provision will be a real money spinner for the Minister. It is clearly not having the counter inflationary effect for which it was designed.
It achieves its objective, which is revenue substitution. The underlying cause of the rise in house prices generally and particularly in Dublin 2, 4 and 6, is increased demand. The supply is comparatively fixed and there has been a substantial increase in real demand.
Some of these amendments were passed by financial resolution on the night of the Budget Statement. The Minister's officials explained in the briefing they gave at that time that these provisions were proposed to replace the residential property tax.
The Minister is aware of my views about increasing the rate from 6 per cent to 9 per cent in graduated steps. It is a legitimate decision that can be supported or opposed. However, I did not think it necessary. It made the situation far more complex. If the Minister decides to increase the rate to 9 per cent he must take the consequent flak but this decision was taken because it was believed necessary that the duty should replace the exact amount of residential property tax.
On many occasions the Revenue Commissioners have gone from one system to another and sought to replace the exact amount of revenue foregone. Turnover tax was replaced by value added tax. Turnover tax was simply 5 per cent of the gross amount of takings but it was replaced by a VAT rate of 5.26 per cent to get the exact amount of revenue. The combined rate of turnover tax and wholesale tax was 15 per cent and it was replaced by a rate of 16.37 per cent in the interests of getting the revenue exact. When it was increased a few years later the rate was nineteen point something per cent. Somebody should have simply imposed a rate of 5 per cent, 16 per cent or 20 per cent but the Revenue Commissioners wanted the figures to be exactly right. The same type of thinking obviously informs this decision and an extraordinary amount of valuable time must have been devoted to drafting such complex regulations.
Perhaps the Minister would in future suggest that increases be simple figures of 6 per cent, 7 per cent or 9 per cent. It will benefit his officials. It is not always necessary to do exact calculations. Sometimes it is preferable to take the broader view. My comment is not meant as a criticism. It is a helpful suggestion which the Civil Service might take on board.
Question put and agreed to.