Property tax now on shakier ground over what householders see as early payment

Minister says row due to Revenue offering too many options

Mon, Nov 4, 2013, 01:00

Until last week the decision to bring in the Revenue Commissioners to administer the new residential property tax had seemed a political stroke as cute and cunning as they come.

The handling of the temporary €100 household charge in 2012 was a public relations fiasco with initially low compliance rates. When it was announced Revenue would handle the property tax, its omnipotent image when it came to taxpayer compliance meant there would be no repeat of the boycott. The second significant development was the time delay. Revenue asked for an extra six months to design the system.

So instead of being introduced on January 1st this year it was not introduced until July 1st. Whether intended or not, it had a huge political benefit for the Government. Instead of taxpayers being hit for a full 12 months of property tax, the Government was able to sweeten the pill by demandingly only six months. And by not advertising it too much (in fact, not at all), the full 12 months worth of tax could be stealthily ushered in in 2014 without anybody really noticing.

Compliance rates
The compliance rates were impressive – some 90 per cent had paid by the end of September. What was a little surprising about the options chosen was that over half the households (well over 1 million) had opted to pay by credit or debit card (perhaps this was because the amount for six months was manageable in a single payment).

But that all unravelled in the past week as thousands of taxpayers rose up over letters they received from Revenue.

The paradox of it all is that the uprising had nothing to do with the steep increase in the tax for 2014 compared to 2013 (people will have to pay double the amount). It related instead to the perceived demand for early payment of the tax in November 2013. It led to widespread protests from householders, manifested across the airwaves.

And at the weekend it emerged they had an ally in Tánaiste Eamon Gilmore, who said it was a 2014 tax and nobody should be expected to pay for it in 2013. He also requested that Revenue go back to the drawing board and ensure nobody was obliged to pay the tax (which works out at between €400 and €600 for most middle-income households) this year.

So how did the controversy erupt? Well, according to one Minister yesterday, it was the Revenue suffering from the Othello syndrome of “one who loved not wisely but too well”.

The Minister’s view: the Revenue had offered too many options of payment, with unintended consequences. Its efforts to make things as easy as possible may have made things over-complicated.

In 2013 only one in 10 of householders had opted for phased payments – either with monthly or weekly deductions from salary or by direct debit. In fact only an infinitesimally small number (0.5 per cent) had opted for a salary deduction. That seems odd as it is the most reliable (and, relatively speaking, most painless) method for PAYE employees.

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