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Financial Resolution No. 2: Stamp Duties (Continued)

Tuesday, 10 October 2017

Dáil Éireann Debate
Vol. 960 No. 1

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(Speaker Continuing)

[Deputy Richard Bruton: Information on Richard Bruton Zoom on Richard Bruton] The Minister for Finance is extending this relief by three years as otherwise farmers who are planning succession based on this relief will find themselves subject to the full rate of stamp duty, which is to be increased to 6%. The Minister is also fixing the stamp duty rate for persons who satisfy conditions for consanguinity relief at 1%. This means persons availing of consanguinity relief will continue to pay stamp duty at 1% for the next three years. This change also comes into effect as of 11 October 2017.

That is the proposal being set out. As the Minister outlined, it is designed to raise duty in a way that is consistent with the position in the housing and non-housing market where one is proceeding very rapidly and the other needs attention. This is a provision in conjunction with other provisions in the budget that will help to unlock land for housing development while raising important revenue from a sector that is now in a very strong and healthy condition.

An Leas-Cheann Comhairle: Information on Pat the Cope Gallagher Zoom on Pat the Cope Gallagher The same guidelines apply. We will have 30 minutes in total. I now call Deputy Michael Fitzmaurice who has tabled two amendments. The amendments may be discussed together.

Deputy Michael Fitzmaurice: Information on Michael Fitzmaurice Zoom on Michael Fitzmaurice I move amendment No. 1:

In paragraph (1)(a)(i) of the Resolution to delete "6 per cent" and substitute "6 per cent, except where purchased for farming purposes providing that the land is held for farming purposes for a minimum period of 5 years".

No one has a problem with commercial property. There are two types of stamp duty, residential and non-residential. Anybody who talks to an auctioneer will know the first acre and the house is considered residential and is liable for the low rate of stamp duty. Other than that, the stamp duty on farmland is 2%. We have only two types at the moment. There is ambiguity in the resolution because a farmer who buys farmland - I am not talking about commercial land - will move to the other rate because there are only two types at the moment. If a farmer has a house and an acre, there is one rate, and if he or she buys 50 acres of land it will be under the other rate. I have tabled the amendment for clarity for the Government and farmers. The scenario at the moment is that if someone buys farmland and two or three years down the road they have done the duty on it, they can turn it into whatever they want. What I am saying is a farmer who buys land at the moment will now face the problem that the stamp duty will go to 6%. I have tabled a short amendment so that the stamp duty on land bought for farm use will be left at 2% if the farmer gives an undertaking that it will be used for up to five years, which is fair. That is all I am asking the Minister to do.

Deputy Dara Calleary: Information on Dara Calleary Zoom on Dara Calleary There is an irony that the Minister is the person introducing this legislation. He was a lone voice in the wilderness of the noughties warning against dependence on stamp duty for Government revenues. I will repeat the query of my colleague earlier. Is there absolute certainty in the Department that founding the entire budget on this measure, which it is anticipated will yield €376 million, is a sustainable way of funding the budget and that the €376 million will actually be delivered? Is there certainty in the Department and the Revenue Commissioners on this estimate?

The Minister mentioned that transitional arrangements will be put in place for the Finance Bill. Will those transitional arrangements affect purchasers who have exchanged contracts but have not completed conveyance by 12 midnight? What does the Minister envisage will be the extent of those transitional arrangements? Will the transitional arrangements impact on the potential revenue from this measure?

With regard to Deputy Fitzmaurice's amendment, the Minister for Agriculture, Food and the Marine, Deputy Creed, told his departmental post-budget press conference this evening that this measure did not affect agricultural land. He was very clear on that. The Minister has mentioned the consanguinity relief and the young trained farmer relief. Can he confirm the Minister, Deputy Creed's view that this does not apply to agricultural land, something which he stated very clearly at his departmental press conference this evening?

Deputy Jonathan O'Brien: Information on Jonathan O'Brien Zoom on Jonathan O'Brien I am sure the Minister read avidly the alternative budget we put forward and will know we also proposed an increase in commercial stamp duty. It is a very sensible move. It has been flagged in the tax strategy papers and we know that commercial lending and overheating paid a huge part in the banking collapse so it is very important that we continue to monitor it and that we take action where appropriate to make sure it does not overheat. The banking inquiry pinpointed commercial real estate as one of the major causes of the banking crash. That is why it needs to be monitored and taxed appropriately. I am very interested in Deputy Fitzmaurice's amendment because there seems to be some differences in how this has been portrayed. If the Minister is saying categorically it does not apply to farmland yet that is not reflected in how it is worded, it is something the Minister needs to clarify tonight. If it is a case that we need to put something into the resolution along the lines of Deputy Fitzmaurice's proposal then we will certainly support it. I am interested in hearing the Minister's analysis of that.

Amendment No. 2 proposes changing the timeframe from midnight tonight to 31 December 2017. Will the Minister comment on that because it will have an impact on the proposed revenue which could potentially be raised? What will the implications of that amendment be on the financial resolution?

Deputy Robert Troy: Information on Robert Troy Zoom on Robert Troy Following on from the issue my colleague raised earlier, I want to add my voice to the concern that we intend to fund many of the increases announced in the budget from stamp duty. As Deputy Calleary has said, the Minister was one of the people who advocated against funding day-to-day expenditure through stamp duty, which is a tax that is not guaranteed. It is transaction based so there is no guarantee of a continuous stream of funding. What assessment was done? What are the projected figures for 2018 based on? How were they assessed? Is the Minister confident those figures will be reached? In the event they are not reached, what plans does the Government have to fill the potential shortfall?

The Minister referred to the transitional period. With regard to people who have purchased commercial property through auctions and have paid their deposit, are those transactions covered under transactional payment? Does it apply to anybody who has exchanged contracts to date? The Minister also referred to the potential for a refund for people who have purchased commercial property and seek permission to convert it to residential property. Will there be a refund system and if so, will the Minister enlighten us as to what it will be?

Deputy Bernard J. Durkan: Information on Bernard Durkan Zoom on Bernard Durkan I note the points raised by a number of Deputies about how it might apply to agricultural farmland. My understanding was it did not apply to agricultural farmland but the points raised are valid enough to require that it be double checked.

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