FF TD warns property tax 'political dynamite'

Wed, Apr 11, 2012, 01:00

THE INTRODUCTION of a property tax next year is going to be “political dynamite”, with many people facing tax bills of €500 and more, Fianna Fáil finance spokesman Michael McGrath has warned.

But he welcomed indications that an expert group set up by the Government may propose concessions for those who paid high levels of stamp duty in the boom years.

This proposal, reported in The Irish Times, was also welcomed by Labour backbencher Ciarán Lynch and Wicklow Independent TD Stephen Donnelly, who both said there should be recognition of the costs incurred at that time.

However, Sinn Féin’s Pearse Doherty said the whole notion of a property tax and household charge should be scrapped.

Mr McGrath said the situation facing “people in negative equity, those suffering mortgage arrears and those with a genuine inability to pay” should also be taken into account.

The Fianna Fáil spokesman added: “The full property tax is going to be political dynamite in 2013, and the reality is that many ordinary people could be facing property tax bills of €500 and more.”

Mr Doherty, Sinn Féin’s finance spokesman, said: “Any waiver system must be based on people’s ability to pay, not on the level of stamp duty paid in the past.”

The proposed exemption from property tax for those who paid high rates of stamp duty at the height of the market could mean “a windfall in tax relief for high earners and owners of very large properties”.

The focus should instead be on “the vast majority of the 100,000 homeowners in mortgage distress” and the household charge and the property tax should both be scrapped.

Labour’s Mr Lynch said: “Homeowners who bought their homes at the height of the property bubble, and who paid excessive stamp duty fees, must be provided with some recognition of those costs as we move towards a more progressive property tax model in 2013.

“It is necessary to look at the issue not just in terms of the property’s current value but also in terms of the corresponding household income as well.”

Mr Donnelly said: “If you bring in a property tax, which is essentially a wealth tax, there has to be some consideration given to those who paid extortionate stamp duty in the bubble years, probably 2002-2008.

“The property tax has got to be based on the net value of the property owned, otherwise people in negative equity are going to be taxed on their debt, which would be completely ridiculous.

“If you want a wealth tax: tax wealth, not debt,” said Mr Donnelly.