RONALD QUINLAN
EXCLUSIVE
FINANCE Minister Brian Cowen ignored written requests from three Government ministers to reform stamp duty in last December's Budget, the Sunday Independent has learned.

Letters obtained by this newspaper reveal how Mr Cowen came under pressure from two Fianna Fail Cabinet ministers and one Progressive Democrats minister of state, on the issue weeks before the Budget.

But he refused to seize the opportunity, and now some of his Cabinet colleagues are privately admitting Fianna Fail missed a golden opportunity to gain public support in advance of the General Election.

The ministers involved were Arts Minister John O'Donoghue, Social Affairs Minister Seamus Brennan and junior Health Minister Tim O'Malley.

"This is a major issue for middle Ireland, make no mistake about it," another minister said last week.

He added: "Once Michael McDowell, a senior minister, raised the issue at the PD party think-in last September, people started to ask why something couldn't be done about it. That was followed by the articles in the Sunday Independent, a very influential newspaper.

"If there weren't questions on the doorsteps before, or if there wasn't an awareness of

ANALYSIS:

stamp duty and the potential for reform, there is now."

Last week, Fine Gael published a plan to reform stamp duty for both first-time buyers and those trading up or down, which would cost the Exchequer just €450m.

Under Fine Gael plans, no stamp duty would be paid on the first €100,000 of any house. A five per cent rate would apply on the next €350,000, and nine per cent would be payable on any portion of a house price above €450,000. For an average house, the stamp-duty bill would fall to €12,500.

Today's exposure of the longstanding turmoil within Government - and in Fianna Fail particularly - over stamp duty was acknowledged last night by a Fianna Fail minister. When told of the three ministers' letters, he said: "Stamp duty was always seen as one of those taxes that you just couldn't touch. That's changed now.

Asked if there was any formal discussion at present between Fianna Fail Cabinet members on stamp-duty reform, the minister said: "There isn't any formal discussion going on at Cabinet yet, but there is definitely discussion between ministers on an informal basis."

All three ministers - the Minister for Arts, Sport and Tourism John O'Donoghue; the Minister for Social and Family Affairs, Seamus Brennan; and junior Health Minister, Tim O'Malley - each made pre-Budget submissions on behalf of constituents facing the prospect of paying the punitive tax.

The three letters capture the stamp-duty dilemma faced by first and second-time buyers of second-hand houses. All three were written at a time when the Finance Minister, the Taoiseach, and Fianna Fail in general, were at pains to play down the issue of stamp-duty reform.

On October 19 last, Mr O'Donoghue wrote to Mr Cowen, on behalf of a first-time buyer looking to buy a second-hand home in Cork city.

In his letter, Mr O'Donoghue tells his Cabinet colleague how his constituent is "most anxious that the issue of stamp duty for first-time buyers is addressed in the forthcoming budget".

According to the prospective house buyer's letter - a copy of which Mr O'Donoghue sent to Mr Cowen - he faced a 100 per cent mortgage over 35 years, requiring repayments of €2,000 a month. The couple said their €24,000 in SSIA savings would have to be used to pay stamp duty on the €400,000 house.

"It infuriates me to have to hand over my SSIA savings for stamp duty, or any other savings. First-time buyers should be exempt from stamp duty. If house prices increase as a result of removing stamp duty, at least the increase can be borrowed as part of a mortgage and not remain an additional cost.

"I trust this appalling tax on first-time buyers will be addressed in our forthcoming budget," the minister was told.

On October 24, Social and Family Affairs Minister Seamus Brennan made a representation on behalf of a constituent seeking the outright "abolition" of stamp duty.

In his brief letter, Mr Brennan informed Mr Cowen that the person had contacted him as a result of "recent reports in the media" that stamp duty was to be changed.

On November 21, Minister of State Tim O'Malley wrote to Mr Cowen on behalf of an intending second-time buyer in Carrigaholt, Co Clare, asking what plans the Department of Finance had to reduce stamp duty in the Budget.

In his representation to the Finance Minister, the Progressive Democrats junior minister stated that his constituent was facing a stamp-duty bill of €13,000 on the property. Mr O'Malley concluded his brief letter by asking for Mr Cowen's views in writing on the issue.

In reply, Mr Cowen merely acknowledged the letter and said its contents would be "considered in the context of the forthcoming Budget". However, the finance minister failed to act on the issue.

It is also understood that numerous backbenchers from both Fianna Fail and the Progressive Democrats had expressed their concerns.

On September 27, Kerry North TD Thomas McEllistrim wrote to the finance minister on behalf of a single parent who had been forced to move house as a result of dampness in her home.

Describing his constituent's predicament, the Fianna Fail TD says: "She has informed me that she worked hard all her life and never claimed One Parent Family Allowance, and never got a council house, and she feels this [stamp duty] is now very unfair, particularly for people in her situation."