Still can't get no satisfaction on stamp duty, says Marc Coleman

He doesn't have it in the hips, but he sure does have it in the lips: look closely enough at our Finance Minister Brian Cowen and you may agree that - in a crazy mirror kind of way - he bears more than a passing resemblance to Mick Jagger. As it turns out the old rocker (Jagger I mean) is coming to Slane castle next August for one last strut on the stage.

Some friends and I have threatened to attend the gig and Rolling Stones tunes have been doing the rounds in my head these past few weeks. When I attended last Thursday's Fianna Fail manifesto launch and heard the Taoiseach promising to abolish stamp duty for first-time buyers, this was the one that came into my head:

You can't always get what you want

You can't always get what you want

But if you try sometimes

You might find

You get what you need.

Personally speaking, I would like to think that - as a senior government advisor last week emphatically told me - the stamp duty issue was now 'settled'. By abolishing the tax for first-time buyers the Government has given some welcome support to the weakest sector of the market. But by not extending abolition, or reform, to second-hand buyers, the Government has created the prospect of further uncertainty. Actually, in different ways, both the Government and the alternative rainbow coalition are contributing to uncertainty. Fine Gael and Labour are more comprehensive in the extent of reform. Like the Progressive Democrats they will band rates in the same way as income taxes, making the regime fairer.

They will also reform the rate structure and increase the thresholds significantly. But they are refusing to back-date the reforms to the present. They also won't say when these reforms will happen. The first position will encourage buyers to stall. With (according to opinion polls) some chance of a rainbow government getting elected, why would anyone sell a house now only to incur a stamp duty bill that will be abolished some months hence?

And unless Fine Gael clarifies its second position soon, that stalling will roll on into the early months of Government. When outlining its own manifesto last Monday, Fine Gael announced that in the first six months of government some €230 million - half the full-year cost of its reform package - would be set aside. This is a face saving way of telling us that it has done a U-turn on its initial suggestion of implementing the reform over three years, and that the party will act immediately if elected.

Unfortunately, not everyone can read these convoluted signals and Fine Gael should just bite the bullet and swallow its pride.

As for Fianna Fail, its move removes any uncertainty for most first-time buyers. With Fine Gael and Labour favouring the abolition of the duty for first-time buyers buying properties up to €450,000, this market is nearly in equilibrium. The real problem with Fianna Fail's position is that it so far does not support reforming the tax for second-hand buyers. On Thursday I asked Bertie Ahern whether - if market conditions should justify it - he might consider extending reform in this direction. His response was that such policy always needed to be 'revised' over the five years of government.

Let's hope that, if re-elected, the forthcoming coalition negotiations will allow Fianna Fail to close the circle on stamp duty: for those caught in a property chain, the tax is killing the transaction at both ends. A huge obstacle to buyers offering a decent price, it is making properties harder to sell. And that, in turn, makes it harder for second-hand buyers to fund stamp duty at the other end of the chain. As Mick Jagger would have put it "I can't get no . . . sat-is-faction. I can't get no . . . chain reaction".

- mcoleman@irish-times.ie

Marc Coleman is Economics Editor of The Irish Times