Monday, September 20th, 2010

Here’s another normative question as per the land banking post last week.  When is a new property a new property?  The question arises because cash-strapped developers have been renting out the properties they have been unable to sell (see here for more details).  As far as the Revenue Commissioners are concerned this means that the property now becomes ‘second-hand’ and therefore liable for stamp duty except for first-time buyers.  It seems that the stamp duty exemption only applies if the property is sold immediately after construction or are not lived in prior to sale.  The CIF and the developers it represents wants a change so that the properties are considered ‘new’ up until the first time they are sold.  Their argument is that it penalises developers for trying to find a cashflow and make ends meet by making the units less attractive to buyers (who have to pay the duty).  And by default, it penalises buyers who previously wouldn’t have been liable for the duty.  The flip side is that the property is clearly not ‘new’ in the sense that people have been living in it and, at a time when the state needs all the revenue it can generate, any change in the rules will deny a source of duty.   So, the question is – at what point does an unsold property stop being a new property?  When it is first lived in or when it is first sold?

Rob Kitchin


There was a bit of coverage at the weekend re. Dr Michael Somers, former chief executive of the National Treasury Management Agency (NTMA), when it was officially revealed that his 2008 pay was €1 million (see here for example).  That made him the highest paid civil servant in the country at the time.  Now we could debate the merits of his pay as a public employee, but the statement that has set my alarm bells ringing is this – “His 2007 pay could not be revealed because the department had no record of the figure.”  The NTMA is the agency that manages the country’s assets, liabilities, debt and various financial funds, including the national pension reserve.  Given what is happening in the bond markets it is desperately trying to argue that Ireland is not a financial basketcase and will manage its way out of the crisis.  And yet it seems incapable and/or unwilling to provide basic information concerning its own financial affairs.  This is hardly a statement to inspire confidence.  In fact, it is a statement that sets alarm bells ringing.  An NTMA spokesperson states: “The confidentiality around the chief executive’s remuneration has become a distraction and [is] unhelpful.” No argument there.  The problem lies with NTMA and providing answers, not those asking the questions.  Is there a credible reason as to why an institution that manages finances on behalf of the taxpayer cannot provide records of its own financial affairs, including salaries of its employees?