So just how can Stamp Duty be reformed ?

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redstar

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Michael McDowell is promising to reform the Stamp Duty system. He says "the Govt do not need all the money that comes in from this tax". Cowen says that any reduction in SD would have to be made up from somewhere else.

My first thought is that if , say, it was abolished house prices would rocket by a similar amount that would have gone on Stamp Duty. This happened when the limit for SD was set to 317.5K. Where I used to live, houses which were around 275-280k went very sharply up to 317.5k

So what CAN be done with SD without grossly distorting the housing market ?
 
SD already distorts the housing market. Its removal will be removing an imbalance already in place. Houses that were worth €280k jumped to the the SD threshold because buyers were bidding stupidly viewing the threshold as a target.

By using a sliding scale for SD this effect could be negated.

Likewise, the "no SD on new builds" rule simply places a premium on new developments which goes into the developer's pocket and results in an oversupply of new housing. This should also be scrapped.
 
(possibly trolling but an interesting idea)
Why not increase stamp duty across the board? People are already spending all they can on property, would it not be better for more of that to go to the public good than to property developers?

have 500,000 to spend

option A
50,000 on stamp duty 450,000 to developer

option B
150,000 on stamp duty 350,000 to developer


(figures totally made up)

its not as if any private sellers will be making a big loss.
 
Dont worry, McDowell has promised a lot of things in the past and has never delivered. Thinking of:
more Gardai,
less crime,
more prison places, etc.

Stamp duty is around to stay, government cant afford to get rid of it!
 
Miles said:
Stamp duty is around to stay, government cant afford to get rid of it!
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If we got rid of Stamp duty and VRT how much would the government be down? I think Stamp netted 2 billion last year? any idea on VRT?

Unless they have some great idea for replacing this money it is unlikely they will scrap it. Maybe a property tax is next? (I'd give them 2 weeks before someone burnt down the Dail if they did that)
 
I recently paid over 20k SD. I still ask "why - what do I get for this ?"

Wasn't SD originally to help the poor builders - thats why it wasn't levied on new builds, so as to encourage people to buy new so increasing demand for new houses ?

Now that poor builders are rich, isn't it time to do the obvious ? Abolish SD !!
( rant over !)
 
redstar said:
Michael McDowell is promising to reform the Stamp Duty system. He says "the Govt do not need all the money that comes in from this tax".
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By reforming the stamp duty system, he might only be talking about doing something such as removing the annual stamp duty on credit cards... I'm not convinced any of the politicians want to get their hands dirty by tinkering with the property market at this stage.
 
Afuera said:
By reforming the stamp duty system, he might only be talking about doing something such as removing the annual stamp duty on credit cards... I'm not convinced any of the politicians want to get their hands dirty by tinkering with the property market at this stage.
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It s a good point, whoever touches it will be accused of knocking it down.
 
Where else will they get the tax revenue from?

Thats what Brian Cowen is asking, too. There seems to be a concept of never reducing revenue taken by the Govt. If its cut here then it must be raised over there. To extend this concept, air is not being taxed - how much revenue is the Govt losing by not taxing air ?

Can't they just cut SD and NOT raise it somewhwere else ? The state coffers are awash with money and its not being spent properly anyway.
 
It seems to me the main problem with Stamp Duty is visibility. No one complains about the higher rate of VAT they are paying on new builds compared to Stamp Duty rates, possibly as it is already included in the sale price and can be deferred through a mortgage. Stamp Duty is real because people have to hand over today's salary rather than a piece of the next few decades.
If Stamp Duty is removed then buyers will increase their bids by that amount and possibly more if entering new bands such as 381K had been a controlling factor to date.
Similar to our public spending - the more we have available the more we waste.
 
Another way of looking at stamp duty:

Despite how it appears, it's essentially a tax on the seller not on the buyer:

There is a bit of a myth about stamp duty as it is not a tax on the buyer but on the seller - nobody quite realises this. The former Minister for Finance was in full agreement with me in this regard, as he stated in this House not very long ago.

Let me explain what I mean. If one buys a house and pays 6% or 7% of the cost as stamp duty, or 9% if one pays at the top rate, one must have the money to do so. One must have borrowed it or acquired it somehow and have it in one’s back pocket.

If there were no stamp duty, one would pay the same price for a house because the price would simply increase accordingly. The buyer, who would have the money to pay if there were stamp duty, would be prepared to pay the same amount if there were none. It does not matter to the buyer whether the money is spent on stamp duty or on the house and therefore the person who is actually getting less from this system is the seller.

Stamp duty is therefore a tax on the seller although it does not appear to be so.
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Maybe stamp duty for those selling one ppr and buying another could be reduced, with a rise for those buying 2nd house for investment, to maintain revenue. Stamp duty really penalises those who need to relocate for work, or buy bigger property for kids.
(It might also help McDowell's colleague Parlon with his decentralisation plans):rolleyes:
 
Abolishing stamp duty will not reduce house prices, except maybe on a short term basis, while the tax cost will be transferred to the sellers of property i.e. developers and the like. This actually happened when the ceiling on SD was raised for first time buyers in last years budget - the owners of property below the new threshold got the benefit of the changed SD rate in the form of increased property values. People can rant on about SD, but the fact is people pay for total cost of house purchase (including taxes) and that total cost is only going to change on the basis of supply and demand i.e. market forces. On the plus side, it would give government less money to squander, but no doubt we would have another post on AAM about windfalls for the property developers/flippers/property investors.

IMHO this is just McDowell hiding his poor Ministerial performance (as outlined by previous poster) and trying to appear relevant, and generate ever more newsprint for himself.
 
On the same topic - did anybody see the "PrimeTime" discussion on the Mcdowells kite flying stunt last night?

If this is what passed for research and serious intellectual debate in RTE - im putting my CV in the post to them straightway this morning - I and most other posters in GFD section of AAM could have written the guts of last nights debate on the back of a fag packet in 10minutes.

Talk about free publicity for McDowell - they might aswell have run a PD political broadcast instead.

All the usual suspects

First they had a preamble with M O Callaghan and Cliff Taylor(political chappie from Irish Times) who took 5 minutes to tell us what we already know - McDowell is proposing doing something about stamp duty.

Then they had a report with "industry experts" - asking them for their impartial balanced opinion on the proposal - Wow -Gee Folks ,guess what??? the banks and EAs would be favour of it - Austin "Im singing for my supper" Hughes , other assorted Estate Agents and Auctioneers looking to keep their potential christmas bonuses healty.



Then they asked the "plain people of ireland" for their opinion in a Vox Pop slot. Well if all you had heard over the media for the last 48hrs was that the Gov have 2 and 1/2 Billion that they are not using and that stamp duty is the modern scourge of humanity - what answer would you give???

The mob gave a resounding "show me the money" - one individual stated "that stamp duty was immoral" (Priceless!!)

Back to the studio - M oCallaghan is the populist zone - Why shoudn't the Gov give back the money and get rid of stamp duty to ease the suffering of the multitudes.

Roisin Shorthall was the "only opposition" figure - the 2 others being some PD non entity in Cork parroting Mcdowell's line , and Cliff Taylor who obviously is aware the terms and conditions of his future employment will be set by the property section of the IT.



It was telling that Shorthall didn't attack the proposal with any logic - just the usual "remember the sick and dying at the hospital trolley near you" and that it was selfish and the PDS are seflish etc etc. Labour are terrified of stating the bleeding obvious to the populace of the nation -

that stamp duty or no stamp duty will not make a blind bit of difference to the price of houses in the bubble situation we have now.

If we have 2 1/2 billion lying in the bank why have we planned to borrow nearly a billion this year?

that infrastructure , roads, water, schools hospitals to service all these houses have to be paid from somewhere.


Was any of the above brought up? - not on your nelly - if this is what passes for debate in the intellectual wasteland that is the modern Irish Body politic - Im off to Uzebekistan.



there are countless things we could be doing with the money other than putting in back in the hands of developers, speculators and all others have already gained hugely from this boom as it is. Taxation is very light in this country compared to others, even the USA - personal income tax is vey light - it is your choice if you want to pay more - stop smoking, cut down on the booze - take the bike to work - you dont have to buy that overpriced house .

I have serious quibbles about how those taxes are spent - but thats a debate for another day.
 
edo said:
On the same topic - did anybody see the "PrimeTime" discussion on the Mcdowells kite flying stunt last night?
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Nah, I don't have a TV anymore. The bill for the license fee arrived about the same time as RTE ran "It's my party" and I decided I'd be better off without it.

Cheers for the entertaining rundown on last night's Primetime though, I'm glad to see I'm not missing much! :D
 
room305 said:
Nah, I don't have a TV anymore. The bill for the license fee arrived about the same time as RTE ran "It's my party" and I decided I'd be better off without it.

Cheers for the entertaining rundown on last night's Primetime though, I'm glad to see I'm not missing much! :D
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You can watch it online also:
[broken link removed]
 
Secret political memo uncovered - gives some insight ;)

Stamp Duty Must Be Reformed !

For the first time in years we are looking at a sufficient build up in housing supply that downward pressure is being exerted on asking prices. A slight advantage now exists for the buyer who even has the option of waiting to allow further downward pressure on prices to develop!

This situation cannot be allowed to continue. It is imperative that the government does something to kick-start bidding wars again to
keep property prices accelerating and borrowing to the absolute maximum. There is a clear threat to property interest and bank profitability here
so it must be addressed as soon as possible.

If the actions can be dressed up to appear for the benefit of the poor first time buyer then all the better. If house prices and bank
profits accelerate again it can be put down to the usual: booming economy, we're so wealthy etc. These are readily accepted.


p.s. It is vital that any discussion or media coverage begins with the premise that stamp duty should be reformed and not approach
the question of whether reform will actually reduce prices for first time buyers.
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;)
 
There are little or no properties in the Dublin area that are less than the 317K threshold. Perhaps the Government could leave the threshold in situ but only charge stamp duty on anything over that amount. 9% is a ridiculous amount given most trader uppers in the country would fall into this category.
 
What a pile of crap,you'd swear these lads weren't in power for the last 10 years or something where was all this concern then and why are we getting this just as the market is starting to wobble !.
I certainly don't know anyone that has paid over E635,000 or anything near it for a house in my peer group,this is aimed clearly at cementing his own constituency dressed up as helping out the little people.
I'd say stamp duty is one of the few taxes the rich in dublin are paying with all the other little avoidance schemes in place,it must be killing them.
Taxes are only for the little people in this country.
 
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