Ahern asked McCreevy to scrap stamp duty measure

The Taoiseach was among seven Cabinet members who lobbied Mr Charlie McCreevy to abolish stamp duty rates aimed at discouraging…

The Taoiseach was among seven Cabinet members who lobbied Mr Charlie McCreevy to abolish stamp duty rates aimed at discouraging private investors in the residential property market.

According to documents released under the Freedom of Information Act, other Cabinet members who made representations to the Minister for Finance on behalf of constituents or other interests included the Minister for Public Enterprise, Ms O'Rourke, the Minister for Tourism, Dr McDaid, the Minister for Agriculture, Mr Walsh, the Minister for Justice Mr O'Donoghue, the Minister for the Environment, Mr Dempsey and the Minister for the Marine, Mr Fahey.

All were members of the Government when the controversial measures were brought in as part of the second Finance Act 2000. The measures included a flat rate of 9 per cent stamp duty on investors buying residential property in addition to a 2 per cent anti-speculation tax on such properties per year for the first three years of ownership.

The 2 per cent tax was done away with through a change to the 2001 Finance Bill at committee stage, several weeks after it was originally published in mid February. The 9 per cent flat rate on investors buying new properties was abolished but retained for second-hand properties.

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The documents also show Department of Finance officials advised against changing the stamp tax regime, arguing that the level of representations indicated the 9 per cent investor stamp duty was having the desired effect.

They also cautioned that the removal of the investor rate, so soon after its introduction, could be seen as a volte-face indicating failure or lack of belief in the Government's own policy.

The Taoiseach made a representation in June last year on behalf of Mr Gene O'Carroll, the chairman of Drumcliffe Fianna Fail cumann. Mr O'Carroll had expressed concern to Mr Ahern about the impact of the tax on the Rural Renewal Scheme to encourage people to live in Leitrim, Sligo and Roscommon.

The Government chief whip, Mr Seamus Brennan, also made a representation as did junior Ministers Mr Eamon O Cuiv, Mr Noel Tracey, Mr Tom Moffat, Mr Hugh Byrne and Mr Eoin Ryan.

Pressure was also applied by Mr Jackie Healy-Rae, the Independent Kerry deputy, and by numerous Fianna Fail back benchers as well as Opposition deputies.

Mr Healy-Rae wrote several times to Mr McCreevy including a letter last October in which he asked: "Could I appeal to you in a very special way to see if there is any way you would have a second thought about the 2 per cent speculative tax in the Budget. I think that you would be really helping yourself and the Government if you would consider changing that tax."

Mr Healy-Rae is the unofficial leader of the four independent deputies on whom the Government relies for its Dail majority.

Some businessmen lobbied Mr McCreevy directly, including Mr Sean McEniff, the well-known hotel owner from Donegal.

Mr McCreevy ultimately attributed the late changes to the regime to the tax's "negative impact on developers and potential investors" and said leaving the investor rate unchanged in the second-hand market while reducing it somewhat for new property "maintains the relative advantage of first-time purchasers in the second-hand market". They accounted for two-thirds of first-time purchase transactions, he said.

John McManus

John McManus

John McManus is a columnist and Duty Editor with The Irish Times