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  • irishtimes.com - Posted: July 28, 2009 @ 12:15 pm

    Death and Taxes

    Deaglán de Bréadún

     The French anarchist, Proudhon said, “Property is theft!” but a more apposite quote might be Benjamin Franklin’s statement that the only certainties in life were, “Death and taxes”. Herewith a piece from the print edition of the newspaper on the Commission on Taxation Report, which is to be finalised today and will be considered by Cabinet in September. Some of its proposals are likely to be quite controversial. 


    Pierre-Joseph Proudhon (left) and Benjamin Franklin

    Commission to propose property tax and water charges
    Deaglán de Bréadún, Political Correspondent
    Mon, Jul 27, 2009
    THE REPORT of the Commission on Taxation, which is to be finalised on Wednesday, will include proposals for a property tax, water charges and a carbon tax.
    It will also contain recommendations to keep income tax low and cut stamp duty on house purchases.
    Work on the final draft of the report was continuing over the weekend but this was mainly focused on issues of tone and presentation rather than content, which is largely agreed.
    It is understood that, if the property tax proposals are implemented, the average payment would be less than €1,000 per annum and could be in the region of €600-€800.
    The total amount of revenue to be raised from property tax is described as comparatively modest, at less than €1 billion per annum.
    The commission is said to be concerned to avoid the mistakes made with the short-lived residential property tax of the 1990s, based on the owner’s assessment of “the best price which the property would have been expected to obtain if sold on the open market”.
    Following sustained internal debate, the commission is to recommend basing tax-rates on different price-bands, for example, between €250,000 and €500,000, or between €500,000 and € 750,000.
    “This is an attempt to come up with a reasonably pragmatic solution,” sources told The Irish Times.
    The important thing was to get the system into operation, they said. Refinements, including a more sophisticated valuation system, could be introduced in due course.
    The householder would nominate the band to which his or her home belonged, although it is expected this would be subject to review by Revenue officials.
    Commission members are aware that house prices are currently in flux and that owners are unsure of the value of their homes at present but it is hoped that the market will stabilise over a period of time.
    The commission has also taken into account that, for example, retired persons on fixed incomes might be unable to pay the property tax, and account would be taken of special circumstances.
    Whereas the initial tax-take would be expected to go towards reducing overall Government liabilities, the intention is that within “about five years”, funds raised from property tax would in large part be allocated to the local authorities.
    “This isn’t going to be a massive revenue earner,” sources said. “This is not going to be the solution to our public finance problems.” The property tax would bring in “less than €1 billion per annum” .
    In parallel with its property tax proposal, the commission will also recommend a sharp reduction in stamp duty on the purchase of houses.
    A major theme in the report will be the need for a stable tax base which is not subject to the existing level of fluctuation. Stamp duty, for example, depends on the level of house sales.
    Water charges are also proposed in the report, above a certain level of consumption, although the absence of a system of water meters poses a difficulty. Irish people use considerably more water than other European countries and a water charge would reduce waste.
    The commission’s brief includes the phasing-in of a carbon levy, which would mean modest increases in the price of petrol, coal and peat briquettes.
    The 17-member commission is chaired by Frank Daly.
    (c) 2009 The Irish Times

    • Liam says:

      I must say I will find it very unfair that there is not an ability to pay built into it and a Sq. foot element. In the area I live in Dublin there is a mixture of families form retired Garda to Merc-driving bank directors, depending on when they bought.
      I can also imagine that anyone who bought in the last 3 or 4 years and are paying their stamp duty via their 30 year mortgage will feel like they are being ripped off.

    • robespierre says:

      For people who have paid very large sums of stamp duty recently the property tax will be toxic. Even keeping stamp duty at 1% will be too high in the context of an annual charge of 600 euros on an average house. This equates to 18k over a 30 year mortgage at constant prices.

      Generally I am in favour of polluter-pays taxes as it encourages efficiency. McCarthy however recommends that no taxes be ringfenced so we will find ourselves being levied for a specific charge with no guarantee that the money will be spent on the item being taxed. This is currently the case with road taxes which are not ringfenced and used for road maintenance and safety.

    • Deaglán says:

      Liam, It is intended to have an inability to pay clause, although the details are not available at this time.

    • Dan Sullivan says:

      There would have to be some credit given for the stamp duty paid over the last 5/10 years. Otherwise, it will seem like some sort perverse joke on behalf of those in their late 50s who bought 20 years ago, and watched their capital skyrocket while younger people paid as much in stamp duty as they did for their entire house and now are to be all treated equally.

      I personally would favour the exploration of some sort of hybrid poll/property tax which I believe would work better in the long term. A property tax that is based solely on owner-occupiers while taking no consideration of the comparative load on the local authority services of a rented house of 4/5 people compared to one person in their own home is inequitable. We need a form of taxation that is not based on income alone but basing it only on transient property value isn’t on its own the answer. It is part of the answer though.

      As for the water charges, a set fee based on an allowance for the size of household with refunds to those who use less than their allowance and higher charges for those who use more would make sense too. However, this must be coupled with an investment in the water system to ensure that the massive waste due to leakage is addressed.

      And is it just me but would it be only in Ireland that we would introduce a tax on 2nd homes at a level of €200 but then be looking at one of €600/1000 on family homes? Surely, the 2nd home tax should be larger to reduce what would otherwise be the size of the family home tax burden.

    • Liam says:

      D. good to hear , but suspicious that although the ability to pay may help pensioners , I still can’t imagine that it will be graduated in a fair way to reflect incomes. A teacher living in D4 is going to pay much more then a doctor living in South Dublin or in the country.

    • An Fear Bolg says:

      It’s not directly relevant to the collection of taxes, rather the expenditure of same, but this man’s letter should be framed and presented to each government minister:


    • Betterworld Now says:

      Máth An Fear – thanks for the link – devastating information.

      David McWilliams says that the transfer of wealth form the young to the old in our society by way of property prices is unprecedented and unsustainable. And that’s before we start subsidising them through state handouts.

      I have long argued that all state benefits should be universal and fully taxable.

    • Tom Mixx says:

      With taxes so high now what will it be like when you join the EU. Here in the US you can see what a government that Represents? 330 Million people can do to ignore the people. Think it will be different across the pond? If you value your country I suggest a NO vote.

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