Economics: Some people find Podge and Rodge scary, even obnoxious. But - to play devil's advocate for a minute - at least they never insult your intelligence. They are direct and honest, and they possess the great characteristic of being easily avoided: if you don't like them, you can change television channels. And they are never, ever boring.

By raising the issue of stamp duty, Michael McDowell has ensured that the next election will be anything but boring. Other politicians are scared already: Brian Cowen responded by defending the tax, linking it to reductions in income tax.

But income taxes fell in the 1990s, long before stamp duty became the problem it is today: stamp duty has no benevolent brother, only an evil twin. Obnoxious without being honest, scary without being entertaining, the two policies of stamp duty and the benchmarking of public sector pay are the Podge and Rodge of Irish fiscal policy.

In 2002, the year it was implemented, benchmarking cost the taxpayer €1.1 billion. The Department of Finance calculates that, in the same year, property owners paid €666 million to the Government in stamp duty. Apart from demonstrating the satanic nature of the tax, it proves another point: without benchmarking, stamp duty could have been abolished years ago.

Neither policy is necessary or logical. No one should have to pay simply for the privilege of buying a house. And even if one concedes that they should, a flat rate should apply as in the UK and this should be minimal (no more than 1 per cent).

In the Republic we not only have stamp duty rates that run from 3-9 per cent, but the application of these rates violates a key principle of taxation. Higher tax rates should only apply to the price band above the relevant threshold. In Ireland, tough luck. If the price of the house you're bidding on goes above one of these thresholds; you pay the higher rate on the whole price of the house.

And while house prices rocketed in recent years, those thresholds were not updated accordingly, violating another key principle of taxation. That pushed more and more buyers into higher rates of duty.

Between 2000 and 2006, the price of houses doubled, but the burden of stamp duty trebled. It now accounts for almost €1 in €10 paid to the Government. In the first eight months of this year alone, some €2.3 billion was paid in stamp duty - almost as much as in corporation tax.

Benchmarking pay increases have the same ugly feature characterising stamp duty - profound unfairness. As the Economic and Social Research Institute (ESRI) has shown, public sector workers were already 40 per cent better paid than private sector workers before benchmarking. The finding this week from Halifax that key public sector workers have been priced out of the housing market doesn't contradict this. Halifax didn't look at private sector workers, wrongly assuming that, as in its UK base, they are better paid than public sector workers.

McDowell's trouble is that he participated in both of these policy changes. When the present coalition took power in 1997, the buyer of an average-priced house paid no stamp duty. By failing to update stamp duty thresholds, that buyer was three years later paying €4,740 in stamp duty on a house with an average price of €158,508. And average house prices have now risen to €303,274 nationally and €408,959 in Dublin, pushing up average stamp duty bills to €15,163 and €30,644 respectively.

Another problem with McDowell's proposal is that the Exchequer has become a stamp duty junkie. Department of Finance officials have rightly pointed out the consequences of abolishing the tax, which will generate €3 billion for the Government this year. But then again, this amount would probably drown in the amount that could be saved by streamlining the public sector.

One of the false objections to abolishing stamp duty is that it will push up prices. So it will, but this is not to the detriment of buyers. Even if the price of houses rises by the amount of the missing stamp duty, the buyer can at least borrow this amount from the bank. Furthermore, the higher price is something the buyer keeps in the form of housing equity, unlike the stamp duty, which the Government spends.

A more legitimate worry relates to the suggestion of retaining stamp duty for investors while abolishing it for owner-occupiers. This is an excellent idea for houses needed by families. But the Government should proceed more cautiously before applying such a policy to apartments, as a well-supplied rented sector is a cornerstone of a dynamic labour market.

At the very least, the rates and thresholds should be upwardly adjusted to account for higher house prices. The failure to adjust tax thresholds in a decade of rising prices has been one of this Government's biggest failures, affecting income tax and VAT as much as stamp duty.

If McDowell is serious about tax reform, this is where he should start. Merely stating that the tax is "not needed" isn't appropriate. As Brian Cowen and his party and constituency colleague Seán Fleming have pointed out, the momentum of spending planned this year and next depends on the present level of stamp duty (whether they should boast about this is another matter).

But at least McDowell is making economic policy more interesting. And looked at another way, the debate between McDowell on the one hand and Cowen and Fleming on the other could be fascinating. The electorate is increasingly young and urbanised, comprising voters who are more likely to buy houses in more expensive areas. They are also increasingly employed in the private sector, and are losing rather than gaining from high taxation.

Cowen and Fleming's Laois-Offaly constituents couldn't be more different. They have amongst the lowest house prices and stamp duty in the State.

And as recent regional economic data showed, counties Laois, Offaly and Westmeath receive the highest net inflows of taxpayers' money of any region in the Republic. Like the older, rural and public sector voters who traditionally vote for Fianna Fáil, the present stamp duty regime is in their interests.

Not that Cowen or Fleming are cynically appealing to their constituents. But they are being consistent with their interests.

Stamp duty will establish battle lines between rural and urban and older and younger voters. It will test the solidarity of the Government and put the Mullingar accord under similar strain.

Scary and excessive McDowell may sometimes be, but his policies are never, ever boring.