'It will surely raise concerns' – Commercial stamp duty takings are well below target this year
The government increased the rate during the last Budget to fund many tax cuts for workers.
THERE HAS BEEN a significant shortfall in stamp duty takings this year, according to new figures published by the Department of Finance.
Overall, the level of tax revenue collected was just shy of the target set by the government for the first three months of the year, some €141 million, or 1.2%, off the estimate.
One of the biggest shortfalls was in commercial stamp duties, which was outlined as a key revenue-raising measure by the government as part of the Budget last year.
During the recession, the rate of stamp duty on commercial property was cut from 9% in an attempt to breathe some life into the market.
Last October, Finance Minister Paschal Donohoe revealed the government would increase the rate of stamp duty on non-residential property from 2% to 6%.
The government estimated the increased rate would yield €375 million for the state coffers and be the main source of funding for many of the tax cuts announced for workers.
According to tax figures released by the Department of Finance, stamp duty revenue collected during the first three months of this year was €40 million shy of the target, or 12% below the estimate.
In a briefing note, Davy analyst Conall MacCoille said that this will “surely raise concerns” at Donohoe’s department that the additional revenues from the increase in stamp duty may have been “overestimated”.
But he added that it is still too early to outline the clear trends and that tax revenues could still bounce back later in 2018.
Finance Minister Paschal Donohoe
When the increase in stamp duty was announced, commercial property experts were highly critical of the move.
Marie Hunt, the head of research at CBRE Ireland, said that calling the change a negative for the commercial real estate market “is an understatement”.
KPMG partner Jim Clery also predicted that the €375 million additional revenue yield was “highly ambitious”.
Tax revenue
Overall, tax revenues for the first three months of 2018 stood at €11.9 billion, with tax receipts up 3.5% on the same period last year.
However, the takings are still 1.2% behind expectations due to a number of factors, including a lower than forecast yield from income taxes, which was €80 million off target.
The department noted that it does not expect this shortfall to persist since the majority of receipts from self-employed workers will be delivered later this year.
