Thursday, August 5, 2010

Stamped out

The poster boy of the tax boom from the last days of the Celtic Tiger was undoubtedly Stamp Duty.  Though typically associated with property transactions Stamp Duty is actually a collection of six separate duties (two discontinued).
  1. Conveyances of lands, houses and other property, leases and mortgages
  2. Transactions in Stocks and Shares
  3. Companies Capital Duty (discontinued in December 2005)
  4. Cheques, Credit cards etc.
  5. Insurance and Miscellaneous
  6. Levy on Certain Financial Institutions (2003-2005, discontinued)
Some details of the duties can be found in the Statistical Report of the Revenue Commissioners.  Stamp Duty went from being a relatively insignificant source of revenue bringing in a couple of hundred million in the 1990s to bringing in nearly four billion euro at the height of the property-fuelled boom in 2006.  Since then it has collapsed.
Total Stamp Duty Revenue
Of course all taxes rose during the boom, but the rise in Stamp Duty was disproportionate.  By 2006 Stamp Duty had risen nearly 1300% from its 1993 level, while total tax revenues had increased by less than 400%.  See graph here. Stamp Duty made up about 3% of total tax revenue in the mid-1990s, but reached almost 8% of total revenue in 2006. Graph here.
What is of some interest is the source of the Stamp Duty revenues.  The following graph shows the revenues from the six different forms of Stamp Duty. 
Individual Stamp Duties
The source of the “bubble” is easily identifiable!  As a proportion of total Stamp Duty, revenue from the conveyances of land and property rose from and 45% of the total in the mid-1990s to over 80% in 2006.  By 2009 this had collapsed back to 33%.
The following graph gives the proportions of total Stamp Duty revenue that each of the four remaining duties have comprised since the early 1990s.  2009 was the first time that Stamp Duty on the conveyances of land and property did not generate the largest revenue.
Proportions of Individual Stamp Duties
The increase in insurance Stamp Duty is due to an increase in the duty on non-life assurance premiums from 2% to 3% and the introduction of a 1% duty on life assurance premiums.  Without these duty from land and property conveyances would still be ahead and overall Stamp Duty revenue would be down about €200 million.

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