Skip to main content

Homeowners Face Paying €80-a-month Property Tax...

HOMEOWNERS face paying an €80-a-month property tax under a plan drawn up by the country's top economic think-tank.

The charge would be based on the value of homes, and middle-income earners would end up providing most of the tax generated, the study by the Economic and Social Research Institute says.

Homeowners who bought their house and paid stamp duty in recent years would be given a waiver, as they would be regarded as having already paid a property tax. Those on low incomes and people getting social welfare benefits would be exempted from the payment.

Even with these exemptions, a property tax could still bring in close to €1bn a year, as the Government draws up plans for a €15bn package of cuts and taxes over the next four years.

There are 1.7 million households in the country, but the exemption scheme would mean up to 235,000 householders would not have to pay the tax, the ESRI says. But the study, which sets out how a property tax would work, warns that exempting those with little or no income from the payment could stop those on welfare ever taking up a job.

A property tax is currently being considered by the Government, as it strives to meet its €6bn target of cuts and taxes for next year's Budget.

Sources have indicated that it is almost certain to figure prominently in the four-year budgetary plan to cut the deficit, which is set to be unveiled in the next few weeks.

The tax would cost €80 a month for the average household based on a property value of €240,000.

The majority of the tax would be paid in Dublin, as incomes and property values are higher on the east coast. Some 55pc of the tax would be raised in the greater Dublin area. The study found 44pc of disposable income is generated in Dublin.

The ESRI said such a tax could be introduced quickly based on updating existing data on house values, a task that could be carried out by a private firm of valuers.

In two academic papers examining how a property tax might work, the state-funded think tank said the tax would work best if it was based on the valuation of homes.

Dr Tim Callan of the ESRI admitted the study showed that middle-income earners would end up providing most of the tax generated.

The average amount of the tax would be €950 a year, and it would only be imposed on owner occupiers. Middle-income earners would up having to shell out between €832 and €1,040 a year.

Unfair

Asked about middle Ireland being hit by an unfair tax burden, Dr Callan commented: "There is no painless way of getting extra income in."

A property tax is the sort of revenue-raising measure that would have the least impact on the labour market, he said.

The ESRI suggested that a simple property tax, with no reliefs or income exemption limits, at a rate of 0.4pc of a property's value could raise revenue of about €1.1bn per year.

It said there is potentially an important role for property tax in Ireland, but there was a need to shield those who could not pay it. But it added that even if reliefs were built into the system for the low paid and those on social welfare, the tax could still generate close to €1bn.

The paper looks at completely exempting those who earn less than €12,000 a year, or alternatively those who earn less than €15,000 a year, from the property payments.

The study advocates having tapered reliefs from the tax for those earning a little over these amounts. It admits this would discourage people from giving up welfare payments.

According to the paper, the introduction of a property tax could be made more equitable if stamp duty payments were treated as a pre-payment of property tax and homeowners were given a waiver from property tax until this pre-payment had been fully used up.

Treating stamp duty as a pre-payment of tax would mean a family that paid €15,500 when they bought in 2007 would not make a property tax payment for up to 15 years.



Report by Charlie Weston - Irish Independent

Popular posts from this blog

Ireland's Celtic Tiger Excesses...

'Bang twins' may never get to run a business again... POST-boom Ireland is awash with cautionary tales of Celtic Tiger excesses, as a rattle around the carcasses of fallen property developers and entrepreneurs will show. Few can compete with the so-called Bang twins for youth, glamour and tasteful extravagance. Simon and Christian Stokes, the 35-year-old identical twins behind Bang Cafe and exclusive private members club, Residence, saw their entire business go bust with debts of €9m, €3m of which is owed to the tax man. The debt may be in the ha'penny place compared with the eye-watering billions owed by some of their former customers. But their fall has been arguably steeper and more damning than some of the country's richest tycoons. Last week, further humiliation was heaped on them with revelations that even as their businesses were going under, the twins spent €146,000 of company money in 18 months on designer shopping sprees, five star holidays and sumptu

Property Tycoon's Dolce Vita Ends...

Tycoon's dolce vita ends as art seized... THE Dublin city sheriff has seized an art collection and other valuables from the Ailesbury Road home of fallen property developer Bernard McNamara. The collection will be sold to help pay his debts. The sheriff, Brendan Walsh, is believed to have moved against the property developer within the past fortnight, calling to his salubrious Dublin 4 home acting on a court order to seize anything of value from his home to reimburse his creditors. The sheriff is believed to have taken paintings from the family home along with a small number of other items. The development marks a new low for Mr McNamara, once one of Ireland's richest men but who now owes €1.5bn . The property developer and former county councillor from Clare turned the building firm founded by his father Michael into one of the biggest in Ireland. He is the highest-profile former tycoon to date to be targeted by bailiffs, signalling just how far some of Ireland's billionai

I fear a very different kind of property crash

While 80% of people over 40 own their own home just a third of adults under 40 do. This is disastrous for social solidarity and cohesion Changing this system of policymaking requires a government to act in a way that may be uncomfortable for some. Governments have a horizon of no more than five years, and the housing issue requires long-term planning. The Department of Public Expenditure and Reform was intended to tackle some of these problems. According to its website its remit is to “drive the delivery of better public services, living standards and infrastructure for the people of Ireland by enhancing governance, building capacity and delivering effectively”. So how is the challenge of delivering homes for people in 2024 and beyond going to be met? The extent of the problem is visible in the move by companies, including Ryanair, to buy properties to house staff. Ryanair has, justifiably, defended its right to do so. IPAV has long articulated its views on how to improve supply an