Fine Gael has targeted young home buyers, one-income families and carers with a tax package that will form a key part of the Fine Gael-Labour general election platform.
Under Fine Gael leader Enda Kenny's proposals, stamp duty bills would be eliminated for most first-time buyers and cut for other home buyers, while extra tax reliefs would be concentrated on one-income families and carers.
The stamp duty changes, to be introduced over three years to avoid causing tremors in the housing market, would cost €350 million to implement. Last year the State collected €1.4 billion from stamp duty on house sales.
The standard rate tax band for one-income families would jump by €5,000 from €43,000 to €48,000, benefiting 400,000 families, while an extra €1,000 tax credit would be made available to those caring at home for children or elderly relatives.
The tax credit change would cost €100 million, though the full package will be costed by the Department of Finance before it is included in a joint election manifesto, Fine Gael deputy leader Richard Bruton said yesterday.
The proposals, though not yet formally agreed with the Labour Party, are expected to form part of a Fine Gael-Labour economic policy document to be published within the next fortnight, in advance of Fine Gael's ardfheis at the end of the month. Fine Gael decided to publish some details of its proposals early to capitalise on the absence of senior members of the Government, who have travelled abroad to attend St Patrick's Day celebrations.
In addition, the profile it hopes to gain will rebalance the relationship between Fine Gael and Labour, who scored significantly when Labour Party leader Pat Rabbitte announced major tax cut plans last month.
Under Fine Gael's plans, first-time buyers of second-hand homes would not pay stamp duty on houses worth up to €450,000, while the number of rates applied by the Revenue Commissioners would be cut from seven to just three.
Existing home owners would pay 5 per cent stamp duty on homes for which they paid between €100,000 and €450,000 when they move and the rate would jump to 9 per cent above that.
Currently, such buyers would pay 3 per cent stamp duty on homes valued between €127,000 and €190,000 and 4 per cent on homes worth more than €190,000.
Most significantly, under Fine Gael's plan, home buyers would not pay the top rate of stamp duty applicable to them on all of the property's price, but would instead pay the higher rates only on the portion above each threshold.
A first-time buyer would pay €4,500 on a house worth €500,000, rather than €30,000; while an existing home owner would pay €22,000, rather than €37,500 in tax for the same house.
Second-time home buyers of €450,000-plus houses would pay 9 per cent on the sum over €450,000, rather than paying 9 per cent on the full cost of a property worth over €635,000 under the existing rules.
The extra tax relief for one-income families is not an attempt to row back on the individualisation tax changes introduced by Fianna Fáil's Charlie McCreevy, Mr Bruton told The Irish Times yesterday.
However, he said, tax concessions to two-income families exemplified by the 1999 McCreevy changes "had gone far enough and should not go any further" and future reliefs should go equally to one- and two-income families.
Launching the policy in Rathkeale, Co Limerick, Mr Kenny said that the changes would help young couples, one-income families and those who cared for elderly relatives at home.
"Even though many modern Irish families are made up differently from traditional Irish families of years gone by, it remains the most important institution in this country," said Mr Kenny.
"It is the one institution that can still be relied upon to look after the sick, to care for the elderly, to produce new generations grounded in decency and apprenticed in values. But these people, whom the State relies upon to care and nurture, have been neglected by the tax system," he declared.
Highlighting the impact of tax individualisation, the Labour Party said a one-income, married couple with children now pay €6,240 more than a two-income married couple on the same earnings.
FG proposals main points
• Abolish stamp duty for first-time buyers of second-hand
homes worth up to €450,000.
• Simplify rules, cutting number of stamp duty rates
from seven to three: 0 per cent, 5 per cent and 9 per cent. Higher
rates should be paid only on the portion over each threshold.
• Standard rate tax band should be increased by
€5,000, from €43,000 to €48,000.
• A €1,000 increase in the tax credit for people
caring for children and elderly relatives at home.
