Government urged to replace stamp duty with property tax

A LEADING Government think-tank has recommended the introduction of a property tax to replace stamp duty as a measure to counteract a major slowdown in the housing market.

The National Economic and Social Council has suggested that the Commission on Taxation — which is currently carrying out a major review of the Irish taxation system — should examine the possibility of replacing stamp duty with a more broad-based property tax. In a new report, the NESC claims such a tax would provide a “more sustainable and equitable” form of taxation on property.

“It may be possible to design a system of property tax which yields a less volatile revenue stream than stamp duties, which better supports an active housing market and high-quality physical planning,” the report states.

It also claims such a property tax would be “more consistent” with Ireland’s goal of relying on the creation of high-value goods and services for future development.

However, the Irish Auctioneers and Valuers Institute (IAVI) yesterday said comment and proposals about a new property tax would only create further turbulence and uncertainty in the current climate.

IAVI president Edward Carey said it appeared the NESC proposal was to use property taxes to shore up Exchequer losses.

“This type of taxation has been tried before and it did not work then. Replacing, or indeed, supplementing one inequitable tax with another is no solution,” said Mr Carey.

Despite the NESC recommendation, it is believed the Government is unlikely to consider such a measure in the short-term, given the likely opposition from those who have invested in property over the past decade.

The NESC report, entitled The Irish Economy in the Early 21st Century, examines the future of manufacturing and services as well asregional trends within the Republic.

It argues that despite current difficulties, the Irish economy has underlying strengths, meaning prospects for the medium to long-term remain good, if appropriate decisions are made in the next few years.

The NESC claims it is vitally important Government policy should continue to prioritise the implementation of strategic investments contained in the National Development Plan and the Towards 2016 social partnership agreement.

It also underlines the importance of the need for the Government to be cautious in how it manages the difficult transition of the economy during current financial uncertainty.

The NESC — which includes employer, trade union, farming and community and voluntary sector representatives, as well as senior officials from Government departments — stresses that investment across the spectrum must be maintained, even if the position of the economy and Exchequer continues to deteriorate.

In particular, the NESC states that it is vital to invest in childcare, training and education, social infrastructure, regional development and welfare reform.