Irish stock investors
Investors in the Irish stock market – where shares have fallen more than 11 per cent so far this year – had been hoping that Budget 2019 would give them some relief. Donohoe started a public consultation last year on the future of the 1 per cent stamp duty on trading in Irish company shares.
There had been anticipation that the Minister would move to at least lower the rate to match the UK’s 0.5 per cent levy as he had put the review in the context of positioning the Republic for Brexit.
However, the almost €400 million the tax currently generates for the exchequer appears to have been too much for the Government to give up, especially as it has had to rely on unpopular measures such as the tourism VAT hike.
Paddy Power Betfair
Budget days are becoming something to be feared at Paddy Power Betfair’s headquarters in Clonskeagh in Dublin 4.
Shares in the bookmaker have fallen by more than 6 per cent in London since Donohoe announced plans to double the Republic’s betting tax to 2 per cent and raise the duty on commission earned by betting intermediaries or exchanges from 15 per cent to 25 per cent.
The stock is now trading at lows not seen since Paddy Power and Betfair announced their plans to merge three years ago. The group, led by chief executive Peter Jackson since January, has said the measures will cost it almost €23 million.
“Irish authorities have been quite lenient up until now on gambling companies relative to other jurisdictions – but they’re tightening up,” said Darren McKinley, an analyst with Merrion Capital.
The burgeoning private residential sector’s plea that it is part of the solution and not the problem when it comes to Ireland’s housing crisis seems to have received a favourable hearing from Government.
Fears of higher stamp duty on the sector in the budget proved unfounded, a relief to Margaret Sweeney, chief executive of Ires, Ireland’s largest private landlord with more than 2,600 apartments.
“We believe the current approach is appropriate and will underpin the further investment that is required through 2019 and beyond to deliver the volume of apartment and house building which is clearly required,” said a spokeswoman for Ires.
Acquirers of apartment blocks avoided a move by Donohoe last year to triple stamp duty on commercial property deals to 6 per cent. That’s because deals in the sector are typically structured so that apartments in a scheme are sold individually. Residential property sales worth less than €1 million are only subject to a 1 per cent stamp duty.
It had been speculated that Donohoe would target funds and companies buying more than 10 or 15 units with a higher duty rate – addressing a popular view that investors were elbowing first-time buyers out of the market.
Still, Killian O’Higgins, managing director of WK Nowlan Real Estate Advisers, warned it would be prudent for large private residential investors – who spent almost €390 million buying up apartment blocks last year – to await for the publication of the Finance Bill next week before breathing easily again.