578 / 822
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
3 38