Dáil Éireann Debate, Thursday - 6 May 2004
4 Mr. P. McGrath asked the Minister for Finance the aggregate amount of tax of all types raised from the activities associated with the construction, sale, rental and occupation of housing; and if he has plans to change the taxation or other aspects of Government policy towards the housing sector. [13034/04]
View answerI am informed by the Revenue Commissioners that the information furnished on tax returns does not generally require the yield from a particular sector or subsector of trade to be identified. Except for value added tax, VAT, and stamp duty, the amount of tax collected from the various activities specified in the question cannot be readily identified from the overall taxation yield. Accordingly, the specific information requested by the Deputy is not readily available in the form requested.
In the case of stamp duty, the total collected from residential property in 2003 was €528 million. However, data are not collected in a manner which would allow for a more detailed breakdown of this yield. Stamp duty is also chargeable on transfers of sites at the appropriate rates for non-residential property but it is not possible to determine what proportion of the total stamp duty yield on non-residential property relates to site transfers.
In the case of the sale of a new house or apartment to a purchaser, VAT applies at the reduced rate of 13.5% both on its construction and on the site where these are connected contracts and is included in the final price of the property to the purchaser. No VAT applies in respect of the purchase of a second-hand house. The relevant information available in respect of VAT is the estimated yield.
With regard to 2003, the VAT yield from the sale of new housing is estimated at approximately €1,250 million and the VAT yield from the maintenance and repair to all housing is estimated at approximately €320 million. With regard to inheritance tax, it is not possible to separately identify the yield relating to bequests of house property from within the overall tax yield. The net receipts associated with all inheritance tax was €131 million in 2003.
I remind the Deputy that under this Government house building has reached record levels, double the rate when his party was last in office. The best way to provide people with houses is to build them, and that is what we have done. Subsidising the purchase of houses without increasing their supply will only drive up prices. I also remind the Deputy that, as recently as budget 2003, I improved and enhanced mortgage interest relief and extended first-time buyer relief from five to seven years. It is my intention to continue with sensible fiscal policies in this area.
I wish first to correct the Minister on his statement that VAT is charged on buildings at a reduced rate of 13.5%. That is not a reduced rate, the Minister increased that rate from 12.5% to 13.5%.
It is the new reduced rate.
The Minister said he extended first-time buyer relief from five to seven years, but what he did not say is that at the same time he abolished the new house buyer's grant of €3,800. I am not surprised the Minister did not give us the amount collected from house building in terms of taxation. He would not want to state it. The Irish House Builders Association estimates that figure to be €5.6 billion arising out of VAT on houses, solicitors' fees, auctioneers' fees, architects' fees, engineers' fees, stamp duty on mortgages and second-hand buildings if not purchased by first-time buyers, tax on rent collected and, in more recent times, the newly imposed Government tax on houses by way of the development levy. In effect, Government levies account for an estimated 45% of the cost of a house in the Dublin area. The Government takes 45% of the purchase price of any house in the Dublin area and the figure nationwide is 42%.
Has the Minister no shame? He should be ashamed to levy such a tax on young people trying to get on the property ladder. I hope he will not tell the House the Government is contributing down the line. The number of affordable and council houses being built do not come anywhere near meeting demand. Will the Minister suggest how young people might get on the property ladder?
As regards the Deputy's question on whether I have no shame, I am sure he is aware I am a member of the Fianna Fáil Party and, as written and established by official Ireland many years ago, when one comes from that background one accepts that is how things are.
It is in the genes.
That is a joke though I know one can no longer make jokes in Irish life because they will be misinterpreted. I point that out for the benefit of those innocents abroad who might be watching.
I am not too sure from where the Irish House Builders Association got the figure of 45%. However, I presume it includes all taxes in that sector, including PAYE from employees pay cheques which are not specifically related to housing. The total general Government revenue in the State as a percentage of GNP is approximately 42%. In that regard, the figure of 45% is not out of line. As somebody who wants to spend 40% to 50% of GNP on public services, the Deputy should not be surprised if we have to take in the same amount in taxes, otherwise we would run up mountains of unsustainable debt.
Let us take the figure of 45% as representing the amount of money accruing to Government from the sale of a house, though no one can establish that figure with exactitude. That money is spent on a variety of services for which the Deputy pleads each week. It pays nurses, doctors, teachers, gardaí, public servants, including politicians, road maintenance, sewerage services, social welfare and so on. The Government has to collect taxes to pay for those services. We all differ about how one should collect taxes and I have over the years examined some of the ideas put forward by the Deputy's party and others inside and outside the House.
Earlier I gave the figures for stamp duty. There are suggestions that we should abolish stamp duty for different classes of the housing sector. Having tinkered with stamp duty in my time as Minister for Finance, I have learned a great deal about it. I would need considerable encouragement and objective facts to change my view on it. I firmly believe that any change to the stamp duty system is taken up in the developer's price or the market, as happened in the case of the first-time buyer's grant which should have been abolished long before I did so two years ago.
Lest the Minister be accused of misleading the House, social welfare is not paid for from such tax. The social welfare fund is in surplus, as I am sure the Minister is aware.
No, the Deputy is wrong. Social assistance is paid from the general Vote.
Social assistance is, but the social welfare fund is €1.4 billion in surplus.
The Minister likes to see a building bonanza because he gets €100,000 from every new house sold. He has no incentive to reform the housing industry as long as that flow of income into the coffers of the Revenue Commissioners continues. The Government has made no reforms to help young people get on the housing ladder. The Minister has not addressed that issue.
The Leas-Cheann Comhairle has informed me that this question has run over time.
That is not my fault.
Since I came in Deputy McGrath is the only Deputy who has continued to speak.
The Ceann Comhairle has not been here very long.
My answer to the Deputy's question is that I do not agree with him.
The Minister's genes are all wrong as well.
