Cantillon: a withering warning on property tax

Next government will have to make quick decision about whether to revive or kill off property tax

Dr Don Thornhill: suggested a new way of setting the tax based on the funding needs of local authorities

Dr Don Thornhill: suggested a new way of setting the tax based on the funding needs of local authorities

 

The local property tax is now on life support and the next government will have to make a quick decision about whether to revive it, or kill it off. The legislation to be debated – and possibly enacted – in the Oireachtas on Friday leaves all the questions surrounding the tax completely open.

As former senior public servant Dr Don Thornhill pointed out in a report on the tax last June, completed for the Department of Finance, this is not a sustainable option. Unless the tax is put on a fair basis it will either wither away, or face legal challenges.

The problem now is that two people can be living in houses of the same value with one paying the full tax and one paying nothing at all. Those exempted include anyone who bought a house to live in during 2013, or anyone who has bought a new home since then. These exemptions had been due to end in October 2016. However, the proposed new legislation extends this until October 2019. House prices values are also frozen up to then.

The Thornhill report suggested a new way of setting the tax, based on the funding needs of local authorities. This would start from current property tax levels, so that bills would remain stable, but could rise over time. It was an approach which could have avoided the politically lethal threat of higher property tax bills from 2017 on. The special exemptions should end, he says.

However, even this has been judged too risky. The Bill to be discussed this week kicks all the issues to touch and suggests that the existing exemptions be extended until 2019.

The Thornhill report outlined the dangers. The longer revaluations are left, the harder it is to do them, he warned, as the bigger the jump will be. It points to the gradual destruction of public confidence in the old local authority rates system to back this up. Meanwhile, legal challenges are also possible to clearly unfair regimes, as shown by at least one 1980s challenge to the agricultural rates system.

Unless the new government charts a fair way forward, the local property tax could slowly wither away. So much for widening of the tax base, one of the key lessons from the economic crisis.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.