Stamp duty waiver scheme to help traffic and commuters social well being. An Idea!

[monkeyboy]

Simple scheme to help alleviate traffic congestion due to commuters:

I work clear the other side of the city and spend up to 3 hours a day doing the 14 mile ( yes ONLY ) 14 mile round trip, alone in the car.

I have equity in my home and can afford the increased mortgage that’s required to move across closer to my job. I have worked here nearly 4 years.
The savings in fuel wear and tear on the car can be quantified and the reduced time on the road not so easily but of a much larger value and all the associated health and social benefits that come with this too.

The only thing stopping me is the fact that I will have to pay maybe circa 40,000 stamp duty to buy a property in the 500k range@ 7.5%. This, I have no intention of doing. It is too punitative to even contemplate!!!

The powers that be, could very easily waive stamp duty in certain, strict, circumstances, where commuters are moving closer to their existing, longterm, permanent places of work.
Provided this move is not for any reason other than reducing travel time for the individual and family and removing cars from commuter routes. This property could be subject to rental and sales restrictions as exisiting social schemes to ensure peole cannot cash in on the scheme.

It does not diferentiate between class any body at any level can take advanatge of this.

Any opinions.
MB

 

[Howitzer]

Re: Stamp duty waiver scheme to help traffic and commuters social well being. An Idea

-I would propose paying higher income tax to make up any shortfall

Fair play to you. I don't know how keen the rest of the non property buying population would feel though. Would seem to disproportionately affect those on low income as not only can they not afford the buy property, but their taxes are being used to alleviate the removal of, an admitedly penal, tax.

Anyways a replacement shouldn't be needed. The windfall gains to the taxman from stamp duty have only been a feature of the last couple of years. Traditionally this is a tax which wouldn't have contributed a huge amount to the exchecker. Assuming that Cowen hasn't started taking the windfalls of the last couple of years as being a recurring input and so started paying out this cash in expenditure then reforming this tax "should" have zero net effect over the long term. A quick glance at the amount of extra employees which have been added to the public sector payroll since the last election might suggest this is wishful thinking though.

 

[Dearg Doom]

If stamp revenue is decreased the govt still need to collect the same amount of money using a different method.

Why so? This line is regularly trotted out by the government when the idea of reducing or abolishing a tax is mentioned. Why don't they consider making some cost reductions, creating some efficiencies, etc? I'm sure that there must be some efficiencies to be had by scrapping PRSI and all it's complexities and increasing (or not decreasing) income tax. Or how about getting more productivity out of the civil service? In the real world if my business loses a revenue stream I don't have the luxury of upping prices on other streams, so why should the tax man not make the same efforts?

 

[peno]

Re: Stamp duty waiver scheme to help traffic and commuters social well being. An Idea

how about a similar shceme where you only pay stamp duty on the difference between the house your are purchasing and the house you are selling. For PPR only

If you are keeping your property and not selling your ppr than you pay the full stamp duty.

 

[Murt10]

Given the opportunity I would turn Stamp Duty on its head.

Make the seller liable for the full amount of Stamp Duty. Look at all the people who inherit houses. Look at the people who, often with a growing family, trade up from a smaller touse to a bigger one and nearly always have to borrow up to the hilt in order to fund the upgrade. They have to borrow an additional amount in order to pay the taxman. They are effectively borrowing money over 30- 40 years to pay the taxman. It's mad.

The seller is the person who has the money in his hand when the sale closes and therefore is the person that is in a better position to pay the tax.

Murt

 

[3littlefish]

The seller is the person who has the money in his hand when the sale closes and therefore is the person that is in a better position to pay the tax.

Murt

I am keen to see a reform of the Stamp Duty system, although I don't see how that idea would help things. All it does is impose a form of CGT on a persons PPR instead of charging stamp duty on the purchase of a property or PPR.

You also end up with very little gain for the people trading up. They pay a % on the value of their current house instead of a % of their new house. Probably a slight loss in revenue to the exchequer and maybe a minor tax saving for the person trading up but nothing radical in the vast majority of cases.

But what about all those who plan to trade down in their retirement? They would be severly affected and end up paying potentially far more tax.

 

[monkeyboy]

Re: Stamp duty waiver scheme to help traffic and commuters social well being. An Idea

If stamp revenue is decreased the govt still need to collect the same amount of money using a different method.

(aside from my opinion that the revenue does not need to be replaced)

The govt collects the equivilant ( or more ) revenue in even more valuable ways:

1. More productive time available to the workers, less time on road and less hassle to beat rush hour etc mean people are likely/ able to work more.
2. Less congestion on the roads is an obvious although difficult to quantify benefit
3. Carbon emmissions as a result of the being reduced have a very clear cost saving for us as we are constantly exceeding or limits and buying credits.
4. Health benfits and social well being, the govt in some way foots some costs for illnesses that could be reduced or avoided due to long commutes.
ALSO longer commutes increase time on road therfore increase likelihood of being involved in road accidents.
5. We are all aware of the consequences and net economic losses of a N sider crashing on the M50 on way to work in Sandyford causing delays and losses to 10s of thosands indirectly!!
6. Higher income tax is not really an option as people ( to an extent ) have to be willing to take slight pay decreases perhaps to relocate. To an equivilant value that increased time is worth to them fuel and car wear and tear is reduced and of course the health benefits

 

[Murt10]

But what about all those who plan to trade down in their retirement? They would be severly affected and end up paying potentially far more tax.

What about them. Why do you think they deserve preferential treatment, just because they are older? That's no justification. They have presumably reared their family and have had the use of their large property over the years. Now as it is they don't have to pay any CGT on the increased value of their house so the Govt might as well hit them with stamp duty, which would be far less than they would have to pay, if they were paying CGT.

Is it more equitable or fairer to see some unfortunate worker with a growing family borrowing even more, often over 30 - 40 years, to pay the tax instead of the rich old people, who have the money in the bank. If they were worried about their retirement then they should have taken out an adequate pension, and if they took out a pension then they are well enough off and don't need any special tax treatment.

These people looking to trade down were granted a medical card when they reach 70 regardless of their assets or income. It's not them we should be worrying about it's some poor worker on average wage, paying taxes, with children whose health we should be caring about more, who doesn't qualify for this freebie (and its not a freebie, the taxpayer has to pay for the medical card) and you don't think that these people should be paying tax, like everyone else.




Murt

 

[Fergal]

There are many reasons why this nutty tax law needs to be changed. E.g.

- House owners would like to move to a slightly better job in a different town
- A family with a new child needs more room etc.
- What if I need to move again in 2 years time?

I wonder what kind a crime would warrent a 50K - 100K penalty?

Don't assume that the higher the SD rate the more tax collected. Now that we have our 'soft landing', the market will not bear rates > 5%. Instead, investment will move abroad (UK rate 1 to 3%). Good news for FTB, bad news for renters and the Irish exchequer.

 

[Fergal]

What about them. Why do you think they deserve preferential treatment, just because they are older? That's no justification. They have presumably reared their family and have had the use of their large property over the years. Now as it is they don't have to pay any CGT on the increased value of their house so the Govt might as well hit them with stamp duty, which would be far less than they would have to pay, if they were paying CGT.
Murt

It's simple. They don't trade down. With this crazy tax they stay in the big house, heat only the rooms they need and use the money they saved on not paying SD to maintain it.

My parents are doing it. Meanwhile young families that actually need a big house can't afford one because there are not enough on the market.

With this tax in place the rule is: Buy and never sell.

 

[Murt10]

It's simple. They don't trade down. With this crazy tax they stay in the big house, heat only the rooms they need and use the money they saved on not paying SD to maintain it.

My parents are doing it. Meanwhile young families that actually need a big house can't afford one because there are not enough on the market.

With this tax in place the rule is: Buy and never sell.

Or else reintroduce some form of rates or some other tax, based on the value, size and useage of the house to give them an incentive to leave the large house that they no longer need or fully use.


Murt

 

[sunrock]

This is obviously a complicated issue and no doubt smart minds have burned some midnight oil over it for govs and various economic thinktanks.
Lets be honest...the main problem is the high cost of housing,whereby a house that costs in the region of say 150k to build is selling for 3 times that amount....this huge profit margin is bound to stimulate economic activity and contribute handsomely to gov. coffers....nobody in the powers that be, wants to rock that gravy train.In a country with so much land ,the price of housing could easily become reasonable if more land was rezoned.
The idea of switching stamp duty from buyer to seller sounds good,but it reminds me of the idea of driving on the right side of the road....might be a good idea in practice but in reality?First off ,the extra 30k the buyer will save on stamp duty is just going to be added onto the price,esp. as the seller knows he is going to have to pick up the tab.And what about all the buyers who having paid stamp duty are now going to be asked to pay it on selling.
The idea of offsetting the stamp duty paid on one house against the stamp duty to be paid on the house one is moving to, seems fair...to be honest i thought that was the rule.However if that is the rule, it is going to be difficult to change it...as previously mentioned it is going to increase the buyers buying power and we all know that means higher house prices.
Another problem is that making an exception such as this for people moving closer to their workplace is going to present a big temptation for people who wanted to change houses for whatever reason to apply for this s.d. waiver,no matter and despite what rules that apply.
The gov. will of course lose a lot of tax from s.d. , petrol and motoring tax, that will have an immediate effect......the politicians are not thinking long term.
Basically i`m saying this idea sounds good ,but it is not going to happen.

 

[Glenbhoy]

Stamp duty is a tax, pure and simple, buyers factor that into any purchase decision - there are stupid anomalies around the thresholds that should be removed (as they are in most other sections of the tax code), but for all that, I'm pretty much in favour of it as opposed to increased income tax, basically if one wants to incur this tax, one does - it's completely avoidable. Perhaps people would prefer to lose their ppr exemption - that would probably be fairer actually!

The only thing stopping me is the fact that I will have to pay maybe circa 40,000 stamp duty to buy a property in the 500k range@ 7.5%. This, I have no intention of doing. It is too punitative to even contemplate!!!

It's not punitive, because most people factor it into the cost of the house imo - or at least they used to, no, imo the problem is that you don't want to pay 40K stamp duty this year and then find that this time next year that bill would have been substantially smaller, that's perfectly understandable, for that I blame those muppets in the PD's and now FG - have they no understanding of the economy at all?? Parties should have taken a decision for the greater good not to discuss stamp duty, but then I suppose the media wouldn't allow that - has the Indo actually started a campaign to abolish it (i think someone told me that recently)?

This is obviously a complicated issue and no doubt smart minds have burned some midnight oil over it for govs and various economic thinktanks.