A tax loophole that has saved big developers millions in stamp duty is being kept “under review” by the Government, Taoiseach Bertie Ahern has told the Dáil.
Mr Ahern was being questioned by Labour Party leader Eamon Gilmore on the decision to drop plans to ensure developers paid taxes when they entered any arrangement with a landowner.
Under the Finance Act in 2007, Tánaiste and Minister for Finance Brian Cowen created powers to tighten tax law so that developers could not reduce their stamp duty bills on land purchases by delaying taking formal ownership.
Developers can benefit financially by entering a licensing agreement with landowners to build on the land, delaying the final sign-over. The loophole saved developers €250 million in stamp duty in 2006.
The Department of Finance was advised last November not to go ahead with the so-called section 110 provision of the Finance Act in a report by Goodbody consultants.
Mr Gilmore said today it appeared that the “boys in the Galway tent” had “got to work” and that the section to curb the developers’ savings was never enacted.
He accused the Government of “providing a shelter” for the “big guys” and for “big high-rolling land purchases”.
He asked the Taoiseach to explain to homebuyers who had had to pay stamp duty for the purchase of their homes and whose homes were now worth less than what they paid for them, why people buying land for development purposes could get away with paying stamp duty.
Mr Ahern said it was believed the commencement of section 110 would result in driving housing activity levels “fare below long-term requirements”, thereby contributing to spiralling prices for new buyers.
Its implementation would have impacted negatively on the construction sector, he told the House.
The Taoiseach said current arrangements would remain in place but would be kept “under review”.
“There is not enough of purchasing going on, there is not enough of developing going on. We can’t on Tuesday be worrying about construction employment and on Wednesday trigger something to affect construction employment,” Mr Ahern said.