FG and Labour set out stamp duty, tax plans

Fine Gael and Labour have vowed to scrap stamp duty for first-time buyers and reduce it for other house purchasers.

Unveiling their joint economic policy in Dublin today, the parties also said they would reduce the standard rate of income tax from 20 per cent to 18 per cent. They would also increase by €5,000 the point at which one-income, married couples hit the top rate of tax.

The parties say their economic plans will cost €3.4 billion over five years.

"Many people are paying more than an annual salary in stamp duty on the purchase of a home. We are determined to reform that unfair situation," said Fine Gael deputy leader and finance spokesman Richard Bruton at a press conference in Dublin.

The Protecting the Progress An Agreed Agenda on Tax and Jobs document commits the parties, in government, to indexing the standard rate tax band to wage increases on an annual basis, in a way that will provide the same increase for one- and two-income families.

They say that the cut in the standard rate of tax, combined with the increase in personal tax credits, will ensure that no worker earning less than €10.30 per hour (€400 per week) will pay income tax.

The parties did not give a specific time frame for their stamp duty proposals, which would abolish the tax for first-time buyers purchasing houses worth up to €450,000.

Other buyers would pay no stamp duty up to €100,000, 5 per cent on the next €350,000 and 9 per cent on the balance.

"The timing of such a major change in taxation has to be decided by government based on conditions in the market for those buying and selling homes and on the budgetary conditions," the parties said in a statement.

"On election to government, Fine Gael and Labour will review these conditions and assess the best time to implement this priority as a single measure."

Fine Gael initially favoured phasing the stamp duty changes in over three years, but Labour preferred a one-year time frame.

Minister for Finance Brian Cowen has described the proposals as "daft" and said they would have a negative impact on the property market. Mr Cowen has refused to be drawn on his party's plans for stamp duty.

The Fine Gael-Labour document also vows to "rebalance" vehicle registration tax to favour lower-emission vehicles and to abolish excise duty on biofuels made from renewable energy crops.

Fine Gael leader Enda Kenny said it was "unprecedented" that two parties could offer an agreed plan in advance of a general election. He promised to end what he called the "rip-off" experience families and to deliver value for money in public services.

"This is a crucial time in Irish politics, it is an exciting time in Irish politics and it is potentially a transforming time in Irish politics," he said.

"Because for the first time in 10 years, the electorate are going to have a real choice when they go to vote in the next number of weeks.  And not only will they have a chance to change, they will also have a reason to change.  Because, in voting for Fine Gael and Labour, they will be voting for an alliance, that is the only alliance that's there before the next general election, that has set out an agreed agenda on the critical areas that impact on most people's lives, like health, policing, tax and jobs."

Mr Kenny said the two parties represented "the only electable government able to offer an agreed platform in advance of the general election".

Labour Party leader Pat Rabbitte said the document acknowledges that maintaining a prosperous, enterprising economy was the basis of making the improvements in people's lives the parties wanted to achieve.

The parties said their spending and tax commitments are subject to the "over-riding commitment to adhere to the EU Growth and Stability Pact".

"This means respecting the requirement that, over the course of an 'economic cycle', the General Government Balance will, on average, not exceed 1 per cent of GDP."

In the policy document, Fine Gael and Labour promise to maintain the 12.5 per cent rate of corporation tax and the current rate of capital gains tax.

They also promise a 25 per cent cut in the "administrative burden" on companies.

Outlining measures to improve the skills of the workforce, the parties say they would put in place a two-week statutory paid training period paid for by the National Training Fund.

The document also promised to extend medical cards to 40 per cent of the population and the addition of 2,300 acute hospital beds. Free GP visits for the under-fives and and increase in the Garda force to a 15,000 members.

On infrastructure, the parties accuse the current Government of a "decade of mismanagement and waste".

Their document says that despite spending over €50 billion of taxpayers' money, the Government has "failed to address Ireland's infrastructure deficit in a timely fashion".

They promise to "fast-track" urgent investment priorities such as electricity interconnection, broadband, the inter-urban roads programme and public transport.

And on the current Government's decentralisation programme, Labour and Fine Gael say they will reverse the decision to move some of the core policy planning units of government departments away from Dublin city.

Earlier, Fianna Fáil held a press briefing claiming the Opposition's economic plans would cost the taxpayer €10,000 a year.

The Progressive Democrats will announce their economic and enterprise policy document tomorrow. The party promised to abolish stamp duty for first-time buyers at its annual conference in February and to reduce the top and lower tax rates by 2 per cent if re-elected. The current rates are 41 per cent and 20 per cent.