TAXATION:THE GOVERNMENT should consider replacing stamp duty with a property tax, a leading economist has advised.

Speaking at a UCD school of economics conference yesterday, Colm McCarthy, chairman of the new taskforce dubbed “An Bord Snip Nua”, warned that the collapse in property-related taxes – including VAT on new house sales, capital gains tax and stamp duty on property transactions – should not be regarded as a cyclical drop-off.

“There is no guarantee that they are going to recover,” he said.

This raised “deep questions” for the Commission on Taxation, he added.

“Should we bite the bullet and have a regular tax on residential properties?” He explained that this option would provide a much more stable source of tax than stamp duty.

He added that in addition to managing the State’s debt, the Government needed to focus on “deleveraging the country’s balance sheet”.

In order to achieve this the Government should consider realising assets, which could include financial assets, commercial semi-State entities and real property.

In relation to borrowing, he noted that Ireland had never issued index-linked gilts, and said that “there may be sense in doing so over the next few years”.

Ciaran O’Hagan, a fixed income strategist at the investment bank Société Générale, said it was “fantastic” that the Government succeeded in raising €6 billion through the sale of a five-year bond last Thursday considering the difficult conditions that prevailed in the debt market last year.

In response to the question of whether there was a limit to how much debt small sovereign borrowers could raise, Mr O’Hagan said that “the simplest answer is that there is no real constraint” to how much Ireland can borrow.

However, McCarthy quipped: “Who wants to find out how much you can borrow?”