Property tax to start at 0.18%
Homeowners will be liable for a new property tax averaging between €300 and €500 per year under measures announced by Minister for Finance Michael Noonan this afternoon.
The property tax is to be levied at a rate of 0.18 per cent on properties worth up to €1 million and 0.25 per cent on the balance of the value of homes worth more than that.
The tax is expected to generate some €250 million in revenue during the 6 months it is in operation in 2013, and €500 million in 2014.
Mr Noonan said the property tax was being introduced as a “better alternative to increased taxes on income”.
“Property taxes are used across the world as they are a better for the protection and creation of jobs than taxes that increase the cost of employment,” he said.
First-time buyers who purchase properties in 2013 will be exempt from the tax until 2016, as will those who buy new or previously unoccupied homes up to the end of 2016.
There will be no exemption for people in negative equity or those in mortgage arrears.
The new property tax will take effect from July 1st 2013, and will be collected by the Revenue Commissioners.
Owners of residential properties, including rented accommodation, will be responsible for paying the tax, which will be based on the market value of the property.
They will be able to choose to pay the tax by direct debit, by credit card, in cash, or have the sum “deducted at source” from salaries, pensions or social welfare payments.
Owners will be asked to assess the value of their property themselves, based on valuation guidelines to be issued by Revenue. The initial valuation will be valid up to the end of 2016.
Local authorities will have the power to vary the rates by 15 per cent above or below the national rates in order to “better match their funding needs”.
“In this way the property tax will strongly reinforce local democratic decision-making and encourage greater efficiency by authorities on behalf of their electorates,” Mr Noonan said.
The current household charge will cease from January 1st 2013, and the second homes charge will not be payable from 2014 onwards.
Mr Noonan insisted that the property tax was “fair and progressive”, as all property owners would make a contribution but “those who own the most valuable properties will pay the most”.
He said the tax would be “strictly enforced” by the Revenue Commissioners, who would also be collecting any unpaid household charges from this year.
Any household charge arrears still outstanding by July 1st 2013 will be increased to €200, he said.
The Campaign Against Household and Water Taxes group said the introduction of the property tax amounted to a “declaration of war on ordinary people”.
Campaign spokesman Gregor Kerr said members would be organising a series of public meetings and local protests to highlight opposition to the proposed tax, and “build a campaign that will ensure the government’s plans cannot be implemented”.
Submit your budget queries to experts from The Irish Times and PwC who will answer questions until noon on December 6th.