Seanad report:Fine Gael proposals on reform of stamp duty could wreck the housing market, Minister for Finance Brian Cowen warned.
The main Opposition party's approach was almost guaranteed to have an adverse affect on the market though that was not Fine Gael's intention, he said.
Mr Cowen made his remarks on a Fine Gael amendment to the Finance Bill, that any property with a value of less than €450,000 would be exempt from stamp duty provided the purchaser was a first-time buyer and that he or she retained the property as his or her principal private residence for not less than five years.
Following debate, the proposal was withdrawn.
Sheila Terry (FG) said the Minister's mortgage interest relief had been wiped out by the European Central Bank interest rate hikes. Minister Cowen's failure to tackle this matter was being highlighted on the doorsteps.
Martin Mansergh (FF) said that what he least understood about the Fine Gael proposal was its stance on older people selling houses. People in this category had seen an enormous increase in the value of their houses, often 1,000 per cent or more during the last 20 to 30 years.
He had moral reservations about the redistribution of wealth to the older generation because of the enormous increase in the value of property.
Mr Cowen said that while Fine Gael was not setting out to wreck the market, its failure to think through its proposals could have that effect.
"The dynamics of the Fine Gael proposal could well be such that because people are being offered a better stamp duty deal year-on-year for three years running, intending purchasers will undoubtedly absent themselves from the market for as long as possible." This could have a major detrimental impact on one of the economy's most important sources of employment and one of the largest contributors to exchequer revenue.
Ms Terry said the uncertainty in the market had not been created by the Fine Gael proposals because it had begun earlier when the Progressive Democrats had announced their intentions.
Dr Mansergh said that if one destabilised the market by causing unintended speculative effects, instead of a soft landing in the market, this could cause a hard landing. "The people who are the intended beneficiaries of the Fine Gael proposals might find themselves losing quite a lot of equity." He wondered whether such an approach by a political party was responsible.