Sir, – We now have at last realised that we need to encourage the development of zoned land and the full use of existing developments, we are going to introduce vacant site levies, and are now discussing property levies.
We lost a great opportunity to achieve this when we did not carry through the introduction of site value tax (SVT) which was on the 2011 programme for government, because we could not agree a way of assessing land values. Instead we introduced a property tax, which discourages the maximum development of land and property, because it taxes improvements, while SVT encourages them.
The introduction of SVT would stabilise land values which are the major cause of property bubbles. SVT would eliminate up-front costs and recover the costs of new infrastructure over a long period, say 20 years. It would also spread the cost evenly over all land benefitting from the infrastructure, including existing development. SVT would discourage rezoning of land unless there was a viable use for it, and therefore end current pressures on local authorities. It should be introduced initially in place of commercial rates, which Ibec and the Chambers of Commerce have been campaigning for.
The existing local authority staff currently assessing rateable valuations could easily assess the site values, as whole blocks of land have the same value, whereas individual buildings with multi-occupation are very difficult to assess.
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When the commercial tax is in place, the same team can assess residential site values. Subsequently site values can be reassessed in alternate years, as is done in Denmark, where the system has been in place for decades. The cost of administering the system there is about 1½ per cent of annual revenue for the tax. – Yours, etc,
JAMES PIKE,
Chairman,
O’Mahony Pike Architects,
Milltown, Dublin 6.