Cowen insists stamp duty changes justified

MINISTER'S PRESS CONFERENCE:Minister for Finance Brian Cowen yesterday insisted that changes to stamp duty would help bring stability and support to the housing market.

At a press conference last night, he said the reforms were not an attempt to "buck the market", but would provide crucial support at a time when it was needed most.

"I'm not suggesting that the stamp duty changes will be a panacea for the market. They will support the market, provide certainty to the buyer and seller and bring about a much clearer system," Mr Cowen told reporters.

"It's a support which doesn't destabilise the market and it's a counter-cyclical move at a time when it is needed."

Mr Cowen acknowledged that other factors outside the Government's control could continue to affect the stagnant housing market, such as increases in interest rates, the international credit squeeze and oversupply of houses.

He rejected suggestions that he should have acted earlier and said that any attempt to reform stamp duty last year could have inflated prices and destabilised the market. Mr Cowen also rejected Opposition criticism, claiming that Fine Gael's stamp duty reform would have cost the State around €660 million, compared to his reform plans, which are projected to cost €190 million.

He did not rule out further changes to stamp duty in the lifetime of the Government, but said that it was something he did not plan to "keep coming back to each year".

Mr Cowen also defended his decision not to cut income tax by one percentage point, a pledge that was made in the 2006 budget, the last before the general election.

"It was not an unconditional promise," he said. "It was a commitment made on the basis of maintaining our current economic strength at that time."

On the decision to borrow to fund the National Development Plan, he said it was a prudent response to the need to build up the State's infrastructure.

"It is the right thing to do. It would be an error to pull back on our capital programme," he said.

"We need to invest to meet our infrastructure needs and clear bottlenecks that have arisen because of our economic growth and to keep our competitiveness, build up our roads, ports and invest in our social infrastructure, which brings its own returns."

He said exchequer funding would pay for all of the State's day-to-day expenditure next year and half of the capital programme for next year, while borrowing would pay for the remainder.

On the issue of alcohol duty, he expanded on his plans to introduce different duty rates on low-and high-alcohol products.

"I believe the idea has some merit," he said. "I think it's important that the industry recognises that these changes are something which will be positive and provide an opportunity to make product lines to meet that need."

In response to a question on whether redundancies will feature in the Tánaiste's plans for public sector reform, he said job cuts were not off the agenda.

He said the main aim of public sector review was to identify ways of making it more efficient. In the area of health, he said some areas were performing well, while changes in work practices in other parts of the service could help "liberate" the service.

Mr Cowen insisted it was not a "paper reform" and that all issues would be on the table when department officials report back to the Government on the issue next March.

"This can be a very positive move," Mr Cowen said. "The Revenue Commissioners are providing services to two million taxpayers with the same number of staff that they did when providing services to one million taxpayers . . . It's also about tapping into that culture of innovation."