Budget 2018: Donohoe says stamp duty changes will not dampen supply

Minister says he has received assurances from Revenue that changes will deliver tax yield without hindering activity

At a press briefing on Tuesday evening, Paschal Donohoe said his department has carefully assessed the level of activity currently under way in the commercial property sector. Photograph: Dara Mac Donaill

At a press briefing on Tuesday evening, Paschal Donohoe said his department has carefully assessed the level of activity currently under way in the commercial property sector. Photograph: Dara Mac Donaill

 

Minister for Finance Paschal Donohoe said he has received assurances from Revenue that the increase in stamp duty on commercial property transactions will deliver the required tax yield without dampening activity in the sector.

The trebling of commercial stamp duty from 2 to 6 per cent announced in the budget is expected to net the exchequer €376 million per annum and ranks as the single largest revenue-raising measure.

It will pay for the bulk of the cuts to USC and income tax.

At a press briefing on Tuesday evening, Mr Donohoe said he received figures from the Revenue Commissioner in relation to the yield the stamp duty change would deliver while his department has carefully assessed the level of activity currently under way in the sector.

“And we’re confident that the yield we have on that figure will be delivered.”

Minister Donohoe also noted that the revenue expected to flow from stamp duty on property next year will still only be half what it was during the boom.

Stamp duty on commercial property transactions was originally 9 per cent but this was reduced to 2 per cent after the crash to stimulate activity in the sector.

“Time after time we put in place a tax measure to get a sector to recover and then when the sector has recovered we don’t change the measure back.”

“This has meant that over time we’ve had a tax base where personal taxation has had to pay more and more,” he said.

On concerns that stamp duty is an unreliable tax and posed a risk to the Government’s tax base, Minister Donohoe said: “The measure is undoing a tax concession that was put in place to help that sector recover and we’ll be using a portion of that tax yield to allow us balance our books, to allow us change personal taxation and to allow us increase investment in public services.”

Overall it was about broadening our tax base and making it more resilient, he said.