One of the country's biggest estate agents has called on the Government to clarify the issue of stamp duty following the report by the Commission on Taxation.
Marian Finnegan, chief economist with Sherry Fitzgerald, said that while the commission’s proposal to eliminate stamp duty and introduce a property tax was more equitable for the economy at large, there was a “clear danger” that all market activity would cease until after the Budget.
“The penalising rate of stamp duty applicable in the second-hand market has for too long acted as a barrier to entry to the property market and was in effect a tax on mobility. That said, without an immediate Government decision on this matter there is a clear danger that the all market activity will cease until Budget 2010."
"From an economic point of view a property tax is more equitable. It provides the Government with a recurring income, which is particularly valuable in times of market turbulence. The banding system proposed would make the introduction of such a tax less arduous. Furthermore the possibility that the annual property tax would become an important component of future financing of local government would benefit the development of local communities," she added.
In a statement this afternoon, NCB Stockbrokers said the release of the report “had likely killed activity in the second-time purchase market for the rest of the year.”
“Why would one purchase a property today if the possibility exists that you won't have to pay stamp duty next year.”
“Any lull in housing activity would further damage tax receipts this year as stamp duty and VAT would fall further behind target. This is an unfortunate by-product of releasing the details of the report - the Government may be forced into clarifying the stance on stamp duty.”