IMF plan on property tax too high - Noonan
The Minister for Finance Michael Noonan has said the €1 billion property tax recommended by the International Monetary Fund was too high and would place an onerous burden on the 1.6 million Irish households.
Mr Noonan said that the residential property tax introduced by the Government would be lower but refused to divulge by how much.
Based on his calculation of the yield, the average tax per household under the IMF proposal would be €625 each year.
It has been suggested that Government was working on the basis that the new property tax will yield between €200 to €400 per household.
Mr Noonan said the exact amount of the tax would be released only on the day of the Budget on December 5th.
He also disclosed that the new property tax, to be administered by the Revenue Commissioners, would not come into operation until July 1st 2013.
He confirmed that there will be no household or property charge of any kind for the first six months of next year, once the household charge system expires at the end of this year.
Mr Noonan was speaking to reporters during Fine Gael’s two-day parliamentary party meeting in Westport, Co Mayo.
The ‘think-in’ has primarily focused on two issue: the forthcoming Budget where over €3 billion in adjustments will have to be made; as well as the Children’s referendum which will be held later in the autumn.
The IMF Section IV review of Ireland (an annual review conducted in most countries in the world) recommended that property tax in Ireland should be set at 0.5 per cent of value, a higher rate than has been flagged by Government sources.
The report was not part of the arrangement with the Troika, Mr Noonan pointed out, and the Government was not obliged to accept any of its advice, even though he accepted it was well-founded.
“On the question of the property tax, it’s a condition of our programme that we introduce a broadly-based property tax on residential property.
“On the IMF advice that it should be 0.5 per cent of the value, which would bring in about 1 billion, I would not propose to the Government at that level. I think it’s too high.”
Mr Noonan refused to be drawn on a figure. “I don’t want to give a figure now and I don’t want to mislead you. My colleagues will think that I am pre-empting the decision,” he said.
“If you divide €1 billion by 1.6m homes, I think it’s too much at present for ordinary families to bear. The only reason I’m saying that is in case that it gets legs. It’s a piece of advice from the IMF and we are not taking the advice.”
On the delayed introduction date, he said that in the course of long discussion with the Revenue Commissioners he was told that a certain amount of time would be needed.
On the negotiations to reduce Ireland’s bank recapitalisation debt burden, Mr Noonan accepted that it was unlikely the October deadline will be met but indicated that meeting the deadline was not the Government’s priority.
He said the agreement secured by the Taoiseach at the Summit of EU leaders in June still stood but the methodology of implementing it still needed to be worked out.
He said the deadline was one that had been suggested by EU Commissioner Olli Rehn but that the Government was still working on it.
He suggested meeting the deadline was not an end in itself and the Government would have to wait to see what kind of deal is achieved by Spain. Progress on agreeing on how to deal with Spanish bank recapitalisation has been slower than was anticipated.
“The way it was originally positioned was that whatever Spain got we got retrospectively. If the detail is not worked out for Spain it will be very hard for us.
“It mightn’t be prudent to push for the deadline. If we do and it subsequently transpires that Spain got more than we anticipated or got a better arrangement, to have settled too early could be seen as a mistake,” he said.