A fresh study by Davy Stockbrokers suggests that the Irish Government may be too reliant on stamp duty derived from property.

If property prices in Irelands were to fall back, then the Government would see a shortfall in its finances. A drop of 20% in the countrys residential property market could hit the Irish exchequer by €3bn. This year, the Irish Government will collect at least €7.4bn in taxes on the property sector, representing 17% of all tax collected.

Author of the report, Rossa White, said: "A 10% increase on average in both price and volume (of houses, lands and commercial property) would be worth €1.85bn extra in tax receipts in 2007 compared with 2006. If price and volume both dropped 10%, receipts would decline €1.7bn year-on-year. Based on the tax profile for January-September, we think the property bonus amounts to about €1.25bn year-to-date. It could be €2bn for the full year."