Enda Kenny may struggle to corner market in stamp duty cuts, writes Mark Hennessy, Political Correspondent
Given that the Government has spread out to the four corners of the world for St Patrick's Day celebrations, Fine Gael has decided to take full advantage by launching some of its election promises.
The thrust of the package is directed at key constituencies in the general election: first-time buyers, their parents, and one-income families.
Stamp duty is shaping up to be one of the key battlegrounds. Most parties have promised changes, and those that have not, notably Fianna Fáil, can be expected to play catch-up before voters go to the polls.
In fact, so many promises have been made about stamp duty so early in the campaign by so many politicians that it will be difficult for any one political party to capture a "brand identity" with voters on the issue.
Nevertheless, Fine Gael can be expected to reap some rewards for good timing, given that this St Patrick's week has been one of the quietest politically in many a year, as TDs tend to their constituencies, rather than to national issues.
Following Labour's Pat Rabbitte's successful presentation of its tax changes, when he caused political tremors by announcing plans to cut 2% off the standard rate, Fine Gael needed to take the lead position on some major issue.
While yesterday's proposals were not jointly presented with Labour, there is no doubt but that they will be included in the joint economic policy platform expected to be produced by the two parties later this month before the Fine Gael Ardfheis.
Fine Gael wants first-time buyers to be exempted from stamp duty on second-hand homes worth up to €450,000, while the stamp duty imposed on all other purchases would be cut and simplified. The latter change will, no doubt, be popular with house buyers. Those buying their second home would pay 5 per cent stamp duty between €100,000 and €450,000, and 9 per cent above that.
Defending the proposals, Fine Gael's Richard Bruton insisted that the party's determination to make stamp duty changes, particularly on setting a €450,000 threshold, has been long heralded, which is true.
However, some Fine Gael ideas have dropped off the table, for now at least. Last summer, the party said it would "frontload" mortgage interest relief on to the first seven years of the mortgage, the time when it is needed the most.
In addition, Fine Gael then said that it would establish an SSIA-type scheme whereby the State would contribute €1 for every €3 saved over two years by intending home buyers towards a deposit for a house.
Clearly, something must be done about stamp duty since a tax once paid by only a few is now affecting most home buyers. Today, the average bill in urban areas is €41,000 where it was just €9,000 four years ago.
However, politicians have interfered with property at their peril in the past. Fianna Fáil's Charlie McCreevy hit the market when he meddled with mortgage interest reliefs, driving up rents at one point and driving investors into the market on another occasion.
Currently, the tax is iniquitous since it disproportionately affects those struggling to buy their first homes in major cities and towns, reduces the mobility of workers and hinders the best use of older, bigger houses.
Ideally, older owners would be encouraged to sell properties in established areas near schools and services, rather than forcing the State to build entirely new facilities belatedly alongside new housing estates.
Last year, the Progressive Democrats' leader Michael McDowell caused ripples when he voiced in public thoughts about changing stamp duty.
Buyers believed action would come in the Budget, even though he had said that his ideas were not for immediate implementation.
Blessed by the meteoric rise in house prices, stamp duty has become a major boon for the exchequer. Last year, it reaped €1.4 billion from house sales, up nearly 40 per cent on the year before.
The difficulty for all politicians is how to change this, help young home buyers and not simply just increase profits for builders. The law of unexpected consequences affects housing most of all.