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Dáil Éireann díospóireacht -
Tuesday, 23 Nov 1999

Vol. 511 No. 3

Stamp Duties Consolidation Bill, 1999: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

This is a consolidation Bill and I do not propose to detain the House for long in expressing my views on it. I congratulate the officials from the Department of Finance and the Revenue Commissioners who have been so assiduous in putting this together. The Taxes Consolidation Bill, 1997, was, in many ways, a magnum opus and the officials could have been forgiven for resting on their laurels and not finishing the job by drafting the stamp duties Bill. I am glad, however, they did not do that but have brought together this particularly good piece of work. I offer my congratulations unreservedly to them. Without wishing to carp or be negative, they should flaunt their laurels a little, to mix my metaphors, when they next pass the Department of Justice, Equality and Law Reform. Areas of our criminal law would benefit hugely from being consolidated, not least of which are relatively non-contentious areas such as road traffic legislation. If the energy shown by the officials from the Department of Finance and the Revenue Commissioners were brought to bear elsewhere, we would all be the better for it.

I do not intend to say a great deal on this consolidation Bill. However, I invite the Minister to share his thoughts on several issues, either today or on Committee Stage. In a recent conversation, one of the Minister's officials – who is not here today but would be known to the officials present – said that stamp duty was a truly wonderful tax because it increased incrementally every year without the need for the Minister for Finance, or anyone else, to do anything with it; the thresholds were set in stone and had not been changed in decades but the tax take continually increased as long as house prices increased, which they consistently have done in the past decades. For many years that argument held good and Ministers for Finance benefited from it, but given the current state of the Exchequer's coffers there is a case for looking anew at the argument for indexation. The principle of indexation has been accepted in the case of capital gains tax and the thresholds for capital acquisitions tax. In relation to the CPI or, more meaningfully, the increase in house prices, the possibility of indexing the thresholds for stamp duty should be considered.

More recently, in the wake of the first Bacon report on the housing crisis the rates of stamp duty charged were changed in the Finance (No. 2) Act, 1998. I would be interested in hearing either on Second or Committee Stage the Minister's reflections on what has happened since. The specific purpose of the changes was to remove the incentive for investment in housing property by removing the exemption from stamp duty and to increase it for those who wanted to buy for the purpose of living in it. There were indications in the months immediately following the introduction of the Act that it had some effect, that the rate of increase in new house prices had slowed down and in some cases plateaued. That seemed to change around the turn of the year and there is no indication at this stage that the changes have had any long-term positive effect. As the Minister of State is aware, the Minister undertook at the time to review the operation of the changes within a relatively short space of time to ascertain if they had been effective. There is a need to refocus the thrust of stamp duty, not on assisting the construction industry, the traditional focus, but on assisting individuals seeking to buy houses. Rather than exempting new houses from stamp duty the Government should seek to exempt first-time purchasers. That argument still holds good.

On more trivial matters, why is stamp duty charged on documents such as the assignment of life insurance policies? The stamp duty chargeable is only £10. I do not understand the reason for it. From a purely revenue point of view, it seems there can hardly be an argument in favour of stamp duty on ATM cards or cheques. What are the Minister's reflections on the matter?

On a more serious issue, the Minister will be aware that the argument has been made by business in recent months and years that the stamp duty charged on share transfers, more popularly called companies' capital duty, should be reduced, if not eliminated. It is currently charged at a rate of 1%. I see no persuasive argument why this should be the case. It seems that share transfers and Stock Exchange activity are proceeding apace, notwithstanding the rate of duty charged on share transfers, but the case has been made by the industry and the Stock Exchange. I would be interested in hearing the Minister's view.

As the Minister is aware, in my former existence I was a practising solicitor. In presenting a document for stamping is one required to present a PD – particulars delivered – form. I would be interested in knowing what this document is for. Certain information is required in regard to a particular transaction from the purchaser and the vendor, including their RSI number, which is a recent development. Does this contribute to an information bank in the Revenue Commissioners and to what use is it put?

I am conscious of the good work done by the Revenue Commissioners on the Bill, for which I congratulate them. We will facilitate passage of the Bill not just now but also on Committee Stage.

I welcome the opportunity of speaking on this Bill, the second consolidation Bill to be introduced in the 28th Dáil. The Taxes Consolidation Bill was enacted in 1997. As a new Member, I had the privilege of serving on the select committee to which it was referred and I gained an excellent insight into the benefits of consolidation.

I praise the officials of the Department of Finance who have worked on this Bill, having previously worked on the Taxes Consolidation Act. I also compliment the parliamentary draftsman. The task of drawing together the various Acts into one consolidation Bill was a difficult one. Other Departments should follow suit. The relevant Oireachtas committee should review their activities to identify the areas in which there is a need for consolidation. The Social Welfare Con solidation Act, 1994, was of tremendous benefit. While our first duty is to enact legislation, we also have a duty to review legislation to ascertain if it is operating effectively and user friendly to ensure it is being complied with. I hope the Bill will have a smooth passage through Committee Stage. As it is much shorter than the Taxes Consolidation Act, it should not take as long to process. We should apply the lessons learned on that occasion.

Approximately 60 Acts are being repealed or revoked in the Bill, including the Stamp Duties Management Act, 1891; Finance (Customs and Stamp Duties) Act, 1929; Finance (Miscellaneous Provisions) Act, 1935; Solicitors Act, 1954; Value-Added Tax Act, 1972; Postal and Telecommunications Services Act, 1983; Disclosure of Certain Information for Taxation and Other Purposes Act, 1996; Criminal Assets Bureau Act, 1996, and Finance Acts up to 1999. The phraseology used will be the subject of many queries on Committee Stage. While the ideas are similar, different terminology is used. Consequential amendments will be required to possibly 20 other enactments. The Attorney General has issued a certificate confirming that no new legislation is involved.

Stamp duty was first introduced 225 years ago in 1774 as a temporary measure. As we are all aware it has since become a permanent feature of the taxation system. A total of 47 documents were covered by the original legislation. This number increased to 95 in intervening years but has since been reduced to 15 following rationalisation by the Department of Finance. There were changes in stamp duty over the years and with modern information technology, for the first time in 1996 company law was amended to enable title to shares to be transferred electronically. The Finance Act, 1996, provided for the application of stamp duty in respect of electronic messages which are sent to the registrar of a company advising the registrar to update the register to respect the new ownership interest. The brush with modern technology is not over yet and no doubt developments in e-commerce will permit electronic conveyancing in the not too distant future. Just as electronic share dealing was accommodated within the stamp duty system, so too will electronic conveyancing. Major changes in the administration of stamp duty will have to be made to introduce modern technology. The Revenue Commissioners are applying resources from their annual Vote to invest heavily in computerisation of stamp duties, and this is now nearing completion.

The process of consolidation involved consultation with all the practitioners in the legal, accounting and taxation areas as well as the consultative bodies of the various accountancy organisations. I thank them for working with the officials in the Department of Finance to bring this matter to a conclusion and enabling the Bill to come before the House tonight.

One of the greatest benefits of consolidation will be the restructuring of the stamp duty code in a clear, coherent and logical manner. It will be far more accessible and user friendly for everyone, including Members of the Oireachtas who may have to cope with changes in stamp duty on an annual basis. I hope that when the Bill is finalised, the rules and regulations regarding stamp duty will be available on a CD-ROM and also on the Revenue Commissioners' website, making it accessible to everyone.

I thank all the Deputies for their contributions on the Stamp Duties Consolidation Bill. I was not here the other day but Deputy Noonan was correct in his presumption of a connection between stamp duty and the American War of Independence. I am told that the imposition of stamp duty in the American colonies was one of the catalysts for that famous conflict which was so influential on the history of our own country. I apologise again to the Deputy that I was not here but I believe he knows where I was on that occasion.

Deputy Noonan also raised the issue of stamp duty on housing. As he correctly pointed out, this is a consolidation Bill and matters of policy do not arise, but I have noted the point he made. I have no doubt that issue may arise following the budget and in the debate on the Finance Bill. I express my appreciation for the way the Deputy facilitated the passage of the Bill through the House and his complimentary remarks with regard to Revenue and the people involved in the preparation of this legislation.

Deputy Ardagh praised the Revenue Commissioners' website, and I share those sentiments. The Deputy also raised the issue of stamp duty on transfers of businesses from a parent to a child. As I said previously, the debate on this consolidation measure is not the appropriate place to deal with this type of issue. There will be many opportunities in the coming weeks to raise it in its proper context. That also applies to the Deputy's views on stamp duty on share trading. While I have taken note of his suggestions, the totality of the taxation environment is benign for equity investments. That is also the case for other types of investment. On the Deputy's point about stamp duty on the transfers of family businesses, he will be aware that such transfers are assisted by significant reliefs under the capital acquisitions and capital gains tax codes. This is a consolidation measure and it will be transferred to the standing joint committee of both Houses.

I thank Deputy McDowell in particular, for his compliments to the Revenue Commissioners. Given everything that is happening in that department, it is welcome that they have kept their eye on the ball and, following from the Taxes Consolidation Bill, kept this agenda moving forward. If we do not do that, there is always a danger that years may pass before we address it again. There is an appetite for moving on these issues and I am glad that is what we are doing here.

Deputy McDowell raised the question of the effects of Bacon vis-à-vis stamp duty. As far as I am aware, there has been a deceleration in that area in the context of house prices. I do not have an answer to the question he raised about the specifics of the stamp duty issue but I am sure it will be raised over the coming weeks under a different heading. In regard to the question the Deputy asked wearing his legal hat, I understand a copy of the form he referred to is given to the Revenue special inquiry branch. Information assists them in coming to a view on a taxpayer's overall liability for tax. The Deputy raised other specific matters but, as he pointed out, they do not specifically come under this Bill which is a consolidation measure. I have no doubt he will raise these issues following the budget and during the deliberations on the Finance Bill.

I thank Deputy Fleming for his comments on the Bill. As he said, the passage of the Taxes Consolidation Bill was an interesting experience, and we can all see the benefits of it. I have no doubt this Bill will add further to the armoury involved in that legislation.

I thank all Deputies who contributed to the debate on the Bill and reiterate my thanks to the people in the Revenue Commissioners and the officials involved in the Department of Finance.

Question put and agreed to.

In accordance with Standing Order 131, the Bill, with the concurrence of both Houses, will be referred to the standing joint committee on consolidation Bills. I understand that the motions of referral will be moved shortly.

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