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Revenue raised from commercial property sales requires more detailed forecasting, Committee on Budgetary Oversight finds in new report

24 Apr 2018, 15:47

The decision to raise Commercial Stamp Duty in Budget 2018 was a needed move but its expected budgetary impact will require better long-term forecasting, the Committee on Budgetary Oversight has concluded in a new report.

Budget 2018 tripled the rate of stamp duty on commercial property sales to 6 percent in an effort to boost state revenues and to spur developers to focus more on building residential projects. The Committee on Budgetary Oversight has examined whether this increased rate of duty on non-residential sales is performing as forecast and whether future policy moves on Stamp Duty can be supported by more detailed economic projections.

The Committee has found that the government had a sound basis for raising Commercial Stamp Duty in October 2017 but provided little forecasting analysis on whether revenue from this tax source is expected to continue at or above current levels in coming years.

It called on Finance Minister Paschal Donohoe to report by the end of May on whether the present rate of Commercial Stamp Duty is producing the level of increased revenue anticipated in Budget 2018 and to shed light on expected future trends.

Among the report’s other recommendations:
•    Future proposed alterations to significant budget measures should be shaped in consultation with the Committee, before amendments are presented.
•    Any revenue forecasts included in Budget 2019 should project expected revenues over several years, not just the coming fiscal year.
•    Calculations in advance of Budget 2019 should reflect an improved focus on data quality combined with clearer presentation of underlying assumptions, economic modelling and multi-year forecasting.

Committee Chairman Colm Brophy welcomed publication of a report that focuses, he says, on “the quality of information available to inform budget decisions.”

Read the full report here.

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