The developer who has bought the former Irish Glass Bottle site in Ringsend, Dublin, for €412 million will be able to avoid most of the stamp duty on the transaction because of the way the deal is constructed, the Labour finance spokeswoman Joan Burton said yesterday.
She said it was ridiculous that ordinary people trading up were paying 9 per cent stamp duty, whereas the group led by the developer Bernard McNamara will have to pay only 1 per cent on a €412 million deal because of the way it is designed.
"If the reports about the deal are correct, it appears that for tax reasons the sale of the site will be carried out by a scheme to transfer shares in the company. The effect of this will probably be to avoid stamp duty, which as an investment property transaction would be subject to 9 per cent and instead leave it liable to the 1 per cent stamp duty which applies to share transactions," she said.
Ms Burton called on the Minister for Finance, Brian Cowen, to clarify as a matter of urgency whether he has allowed the situation where this particular deal will avoid stamp duty of approximately €32 million - or 8 per cent of €412 million.
"I want to remind the Minister that this year over 2,000 first-time buyers will contribute €70 million to the State coffers in stamp duty. First-time buyers who purchase a second-hand home costing above the exemption limit of €317,000 become liable for stamp duty on the full cost of their home.
"The glass bottle site deal means that a private developer on one deal at a stroke can avoid nearly half the stamp duty paid by first-time buyers," she said.
Ms Burton added that she had repeatedly raised the issue of stamp duty avoidance by big developers with Mr Cowen, but the glass bottle deal suggested that developers were continuing to get away with the most blatant form of tax avoidance.
"On the record of the Dáil, Minister Cowen promised me that the use of 'licensing and similar arrangements such as the transfer of shares in a company rather than the transfer of the property is being subject to an ongoing review by the Revenue Commissioners'. However, the review has not happened fast enough to stop mega-property deals being structured to successfully avoid stamp duty."
"These tax avoidance schemes may well be legal, but they should not be morally or politically acceptable. The Minister could put an end to this scandalous tax avoidance in the morning if he chose to exert himself," she said.
Ms Burton said it appeared likely that the developers who most benefit from the stamp duty avoidance arrangements were among those most prominent at Fianna Fáil fundraising functions in Galway and elsewhere. She asked whether this was the reason that the avoidance of stamp duty continues to be tolerated by the Government.
"Stamp duty avoidance by very wealthy developers stands in stark contrast to the position of the young couple buying a second-hand house for more than €317,000 who have to pay stamp duty," she said.
