Neutralising stamp duty

The Tánaiste and leader of the Progressive Democrats Michael McDowell has added impetus to the agenda of stamp duty reform by…

The Tánaiste and leader of the Progressive Democrats Michael McDowell has added impetus to the agenda of stamp duty reform by promising to change the system before the Dáil's summer recess if his party is returned to government.

And, if any exactitude can be applied to the Taoiseach's words on the day that his twin grandsons were born, Fianna Fáil is cautiously approving of Mr McDowell's commitment. By promising to give the stamp duty changes immediate effect, the Minister for Justice has attempted to outflank the Fine Gael and Labour parties that have offered early reform, based on budgetary and market conditions.

There is some irony to this political twist. Having failed to convince Minister for Finance Brian Cowen to cut stamp duty in the December Budget, Mr McDowell used election pressure to turn the political screw. The Tánaiste expressed satisfaction there was now broad agreement between the Government parties "to move on stamp duty sooner rather than later". The Taoiseach then nodded in the direction of change and an expected Fianna Fáil U-turn. Mr Cowen spoke guardedly of limited reform involving first-time buyers.

Tension between Coalition partners is nothing new. Voters will remember Mr McDowell climbing a lamp post in his constituency during the 2002 election to campaign against the return of a majority Fianna Fáil government. Similarly, support from Fianna Fáil backbenchers for unpopular decisions taken by Mr McDowell and the Minister for Health Mary Harney has been conspicuous by its absence. The election campaign is being fought on the basis of "the devil take the hindmost".

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Circumstances dictated that much of the PDs manifesto was already known. When support for the party fell to one per cent last February, Mr McDowell raided their election manifesto to energise delegates at the annual conference and to appeal to a broader public. It was a considerable risk with echoes of "relevant or redundant" all about. Fianna Fáil was casting around for an alternative coalition partner.

Seven targets have been set for a 2007-2012 government containing the PDs that will involve cutting income tax rates to 38 and 18 per cent, increasing and reforming State and private pensions, changing stamp duty and caring for children. Commitments are based on annual growth rates of 5 per cent, compared to 4.5 per cent for Fianna Fáil and 4.2 per cent for Fine Gael and the Labour Party. The PDs offer continuing health reforms, greater public investment and environmental and energy changes. The tax individualisation issue will be tackled by doubling the under-6 child support, rather than by altering tax allowances.

The PDs are facing into a bad election. But, they have defied their critics before. They may enjoy some small comfort from setting the stamp duty agenda, which is being neutralised with each passing day, and championing auction politics in a way not seen for 30 years.