Stamp duty move could revitalise flagging sector
Outlining his fourth budget, Mr Cowen said the global economy “is beset by uncertainties, financial markets are highly volatile and the construction sector domestically is experiencing a slowdown”.
Nonetheless, he stressed the fundamentals of the economy “are still good”, but admitted: “It is fair to say that the prospects are for somewhat more modest growth than we have become accustomed to.”
For that reason, he said “investment in a sustainable future” was the Government’s top priority, and to this end, he was providing €8.6 billion for capital investment next year, with the emphasis placed firmly on the National Development Plan.
“In the past, governments have reacted to economic slowdown by stalling capital investment. I will not do so,” said Mr Cowen.
He also announced increases in health, education and social welfare spending, and introduced a limited series of measures designed to benefit the environment.
But the stamp duty reform was the single most eye-catching initiative in the budget, the clear goal being to revitalise a crucial sector of the economy.
The changes mean there will be just two rates of stamp duty. On houses costing less than €1m, the first €125,000 of the price will be exempt from stamp duty and the remainder will be taxed at 7%. Houses in excess of €1m will pay 7% on the first €1m and 9% on the excess above that.
Elsewhere, Mr Cowen announced €2.7bn for investment in rail and bus services, roads, regional airports and ports.
He said the Government would provide about €16.2 billion for health next year, up €1.1bn on the 2007 allocation.
He said total expenditure on education would reach €9.3bn in 2008, with the priority being “to provide additional new accommodation to cater for the 13,000 additional schoolchildren who will be seeking a school place next year”.
Mr Cowen announced a range of social welfare increases, including a €14 rise in the State contributory pension to bring it to €223.30 a week.
He also increased tax credits and bands to ensure those on the minimum wage were kept out of the tax net entirely and that average industrial workers paid tax only at the lower rate.
But it wasn’t all good news: Mr Cowen announced motor tax would rise 9.5% for cars below 2.5 litres and 11% for larger cars. The cost of cigarettes will also rise.
Concluding his speech, Mr Cowen said the budget would “sustain our development as an economy, as a society and as a nation”.
