A special Finance Bill is to be brought before the Dail to deal with the tax changes announced by the Government in response to the Bacon report on house prices.

The Minister for Finance, Mr McCreevy, said that in future Section 23 relief would only apply in specific areas where it could be proven to be absolutely necessary for the achievement of the objectives of the integrated area plans under the new urban renewal scheme.

He was speaking during a debate on the recently-announced changes in stamp duty which were approved by the House. He predicted that the reduction in the rates would encourage existing house owners to trade up and thereby provide houses for purchase by first-time owner occupiers further down the price scale.

"The measures are weighted so as to favour first-time purchasers, who would normally be buying at the lower end of the market, i.e. the rate applying for property valued between £60,000 and £100,000, has been halved, where the rates at the top end have not been reduced," he said.

He also proposed levying stamp duty on the purchase of all new residential property by a purchaser who was not an owner-occupier, which was in line with the consultants' report.

Mr McCreevy estimated that the stamp duty measures alone would cost the Exchequer in net terms about £37 million this year and £63 million in a full year.

The chairman of the Fine Gael parliamentary party, Mr Phil Hogan, said the overall thrust of the proposals contained in the Bacon report would not mean any financial respite for purchasers. There would be less property available because of the reduction in incentives and many houses would be converted back into residential accommodation from flats.

Mr Hogan predicted "an enormous hike" in rental income in the autumn, particularly when third-level students returned to college and there was increased pressure on the health boards or provide rental accommodation for refugees.

The Labour spokesman on finance, Mr Derek McDowell, said the Government seemed to find it next to impossible to make a decision without setting up a working party or interdepartmental group, commission or consultancy to advise it on what it should do.

In the case of housing the delay had been disastrous, particularly in Dublin and Galway where house prices had risen by nearly 20 per cent in the past six months.

The Democratic Left spokesman on the environment, Mr Eamon Gilmore, said the Government's package on house prices had come too late and did not go far enough to bring stability and affordability to the housing market.

The Fine Gael spokesman on finance, Mr Michael Noonan, said if the housing crisis continued it would undermine prosperity, wreck social consensus and make the task of local authority housing departments well nigh impossible. "The Government is at last taking action. It may be too little too late, the measures proposed may not work as expected, may indeed have an effect opposite to what is intended, but we must at least call for one small cheer for the Government because at least, and at last, they are taking some action," he added.