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GAZETTE

DECEMBER 1988

(ii) Frequently relatives take

on the obligation of

looking after an elderly,

h a n d i c a p p ed or in-

capacitated person and

devote so much time to

the care of that relative

that they are incapable

of earning a living. In the

event of the relative

making a gift or be-

queathing property to

the person caring for

him or her, the receiver

wou ld find it difficult to

pay t he t ax on t he

property received, pro-

perty wh i ch the giver

thought wou ld be some

reward for the care and

devotion shown.

(iii) Elderly pe r sons w h o

looked after relatives,

not necessarily children,

and who assumed a

du ty of care to the

younger person wou ld

be penalised and wou ld

be unab le to ma ke

sa t i s f ac t o ry provision

for him or her.

It is submitted that some f o rm

of relief be g i v en in s u ch

circumstances - Sec. 4 4 is not

sufficient and is rarely, if ever,

used.

3. Stamp Duty

(a) Despite the introduction of

the 5% rate in the 1988

Budget, the level of Stamp

Duty is much higher than in

the U.K. The high level of this

duty is the greatest single

obstacle to the freeing of the

housing market, particularly in

t he l ow c o st area. Any

concession in the low cost

area, in respect of Stamp

Duty, will help to overcome

d i s t o r t i on in t he hous i ng

market due to the former high

level of housing subsidies. It

is submitted that there be a

two-tier rate of Stamp Duty

on secondhand houses of 3%

up to £ 4 0 , 0 00 and of 4%

thereafter. It is visualised that

sales of plots of land could

attract Stamp Duty at the

higher rate. The potential loss

arising out of the introduction

of these lower rates could be

overcome by buoyancy in the

property market, resulting in

increased income.

If a

quid

pro quo

is

ne c e s s a r y,

t h en

it

is

suggested that a new (1%)

low rate on new housing be

introduced w i th an exemption

for the " I nner C i t y ".

The practical advantage of

such an arrangement from

the Revenue point of view will

be that many of the problems

of a d j u d i c a t i on on n ew

houses wou ld be removed,

such as the ques t i on of

whether roofs are on or off or

whether there is a single

contract covering the site and

the building or t wo separate

contracts.

In general, provided it was

at a low level, Stamp Duty on

new houses wou ld lower the

compliance costs as far as the

Revenue are concerned and it

wou ld make building-work

and the programming of it

easier for developers and

builders. In addition agents

wou ld need to spend less

t i me

d e v i s i ng

s u i t a b le

marketing packages,

(d) The State is putting itself

forward as a suitable location

for c omp a n i es s u p p l y i ng

Financial Services. A serious

obstacle is the present rate of

stamp duty on transfers of

shares (1%) in comparison

w i t h

1

/

2

% in th U.K. and

Ca p i t al Du t y of 1% in

comparison to the U.K. rate of

Nil. The U.K. rates should be,

at least, matched. The lost

return in revenue because of

t he r e l a x a t i on s u g g e s t ed

w o u l d

be r e p l a c ed

by

increased income tax and

other taxes,

(d) It is submitted that the relief

provided by Sec. 93 F.A. 1982

and since w i t hd r awn be re-

introduced so as to encourage

elderly farmers to retire and

pass the land on to the next

generation,

(d) It is submitted that the Stamp

Duty bands be index-linked in

the same way as submitted

for C.A.T.

4. V.A.T.

Services wh i ch formerly might

have been p r o v i d ed by Irish

Solicitors are not now sought in

view of the disparity be tween the

U.K. (15%) rate and the Irish ( 25%)

rate.

In addition, legal services are a

necessity wh i ch attach the same

rate of VAT as luxuries.

As a step in the preparation for

h a r mo n i s a t i on in 1992, it is

submitted that the rate of VAT on

services be reduced from 2 5% to

15%.

5. Income Tax

(a) Apart from higher wages, one

of t he g r eat

i n c e n t i v es

attracting younger people to

the U.K. and U.S.A. is the

lower rate of income tax

wh i ch ensures that they have

more spendable income. The

high rates of Irish Income Tax

are n o t o r i o us and may

constitute an incentive for tax

evasion. It is submitted that,

as a first step towards the

harmonisation of taxes, the

rates of Income Tax should be

reduced to 3 0%, 4 0% and

5 0% w i th further reductions

in subsequent years until we

match, if not better, our

nearest neighbour. Such re-

d u c t i o ns w o u l d have a

beneficial effect on employ-

ment and increase the tax

yield in other areas.

(b) Bearing in mind that the

majority of self-employed pro-

fessional persons in non-

pensionable employment do

not s t a rt to p r ov i de f or

retirement until they are over

40, it is submitted that the

limit on Retirement Relief,

1 5%, be i n c r e a s ed and

structured according to the

age of the taxpayer. This

wou ld have the added advan-

tage to the Exchequer that the

taxpayer would be unlikely to

require State assistance for

any reason, in later years.

(c) Consistent w i th the special

position of the Family under

the Constitution and in order

t o a s s i st p a r e n ts

w i t h

children, it is submitted that

Children's Allowances be re-

introduced at a realistic figure.

6. Income Tax/Corporation Tax

The Government, some years ago,

stated that they wou ld issue a

Government Fund to persuade

e x p o r t

c omp a n i es

to

keep

accumulated reserves in Ireland. It

is submi t t ed that this proposal be

now implemented and a new ECU

Bond be issued, the income of

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