The Government may have become too dependent on stamp duty to be able to significantly reform it, a leading economist said yesterday.
The warning, from Ulster Bank chief economist Pat McArdle, came a day after the Organisation for Economic Co-operation and Development said Ireland's housing boom had come to an end.
Addressing the national conference of the Institute of Certified Public Accountants in Ireland, Mr McArdle said a quarter of all tax receipts were affected by the property market. "Even with a soft landing, the number of housing completions is likely to fall back towards 60,000 per annum over the next few years.
"The eventual cost to the exchequer in terms of revenue foregone may well exceed €2 billion," he said.
While stamp duty would be affected most, a slowdown would also affect other categories of taxation such as capital gains tax and income tax receipts, he said.
Mr McArdle said the next government's scope for reforming stamp duty was going to be limited. "Whatever the shape of the new government, the scale of any reduction in the stamp duties burden is likely to be modest by comparison with the expectations of the housebuying public."
He added that while further falls in house prices of about 3 per cent were likely, this did not mean the housing market would experience a hard landing.
"The UK, by contrast, experienced a hard landing in the early 1990s when prices fell by 16 per cent and did not regain their 1989 level until 1996," he said.
