Economics/Marc Coleman: "If a warlord in the Hindu Kush controlled a vital pass and fleeced the unfortunate peasants who had to pass through it every day for their livelihood, some people would say: 'That is Afghanistan; it is the dark ages' ". So said Independent Socialist TD Joe Higgins in a passionate denunciation of tolls on the M50.

It's a great quote. But it's applied to the wrong issue, at least NTR built something of merit to justify their toll. The Department of the Environment tell us that 100,000 - most of them owner occupiers - people a year go through the "vital pass" of property purchases. This is where the real medieval warlord - Government - pounces to exact the tribute of Stamp Duty from the helpless taxpayer.

In describing the unfairness of this tax, you have to scratch your head to know where to begin. Firstly, it penalises families. A person with a growing family who needs a larger house for whom new properties - exempt from the duties but usually apartments - are unsuitable pays the tax. Single people or childless couples who can stay their whole lives in the one property escape it.

It also taxes mobility. Tough luck if your job change forces you to buy a new home. For a second-hand house for an average €327,864, according to the latest figures from the Department of the Environment, the Government will hit you for €19,672. So much for Government policy encouraging labour market flexibility.

Thirdly, in order to incentivise the purchase of soulless shoe boxes, new properties are exempt. This bias will over time create a concentration of low income earners in high density apartment complexes - a possible source of future instability in the property market.

The tax is also regionally unfair. The average price of a second-hand home in Dublin is €430,000, compared to a national average price of €327,864. The price differential alone is hard luck. But the threshold for the higher stamp duty rate of 7.5 per cent kicks in between these prices. So while the average buyer outside Dublin pays €19,672 the average person living in Dublin pays €32,267 - a difference of more than €12,000.

Neither is stamp duty a progressive tax. The threshold below which no duty at all is paid is €127,000 and only benefits people who live in coal sheds. The lowest rate of duty, 3 per cent, operates between a price threshold of €127,001 and €190,500 - bad luck for those trading up from a coal shed to a garage. If you aspire to living in a garden shed, a steal these days at anything between €190,501 and €254,000, you pay 4 per cent.

Between €254,000 and €317,500, the rate of duty is already 5 per cent.

The worst is yet to come. The system of rates and thresholds violates a key canon of taxation: they don't work in an incremental way. Suppose you are lucky enough to find a property under €317,500 and you are a first-time buyer. Now suppose that for the same property you get into a bidding war with someone else. The price goes up to €317,501. As a result, you pay 3 per cent of the entire price.

In one bid, your stamp duty bill has gone from zero to over €9,500. A proper operation of the thresholds would apply higher rates only to the bands to which they apply.

There is one redeeming characteristic to which stamp duty might aspire. It might serve as an instrument to favour owner-occupiers over investors. With the exception of new properties, investors - the spoilt brats of our tax code - pay no more stamp duty than owner-occupiers. And none more than those self-same investors are the beneficiaries of new property schemes which this exemption benefits. Nowhere more than here is stamp duty more inequitable or contemptible.

The arguments of its proponents are as irrational as the tax itself is unfair. The first is that abolishing stamp duty would merely benefit the seller by raising prices. Sure, the gain from not having to pay stamp duty would be offset by higher prices, but at least the price of a house can be obtained by a mortgage loan. Stamp duty can not.

Moreover, two-thirds of transactions are between buyers and sellers of second-hand properties. So the higher price of the property, purchased at one end of the chain, is recouped by the higher price of the property at the other. First-time buyers, the remaining one-third of purchasers, generally pay no duty anyway. Of course abolishing stamp duty would hurt one constituent. It would deprive the Government of around €3 billion in revenue.

Of the €50 billion it spends annually, a concerted effort at cost savings in public expenditure could recoup this amount. But how naive of me. This is Ireland, and the right of Government to waste money is enshrined in our Constitution.

At the very least, stamp duty could be made less obnoxious by implementing three key reforms:

Since 2004, the principle of separate rates of stamp duty has already been established for first-time buyers. But it is time to look again at making a further distinction between owner occupiers and investors, with the latter paying the bulk of the tax, despite the failure of the Bacon reforms to successfully address this.

Government needs to graduate the threshold and rates, so that higher rates of duty are charged only for that portion of the price to which they correspond.

Stamp duty thresholds have long since lost any progressive characteristic. They must be amended and then indexed to a credible and recognised index of house prices. The Department of the Environment's index should do the trick.

Pigs will fly!

The fundamental nature of the tax is unchallenged by the Opposition, who hope to assume the power of the warlords some years hence. It's a depressing outlook for the taxpaying homeowner.