The Green Party in government would overhaul property tax to ensure owners of higher value sites pay more, in a move away from the current levy on the market value of a home.
The party’s proposal is in essence is a charge on where a property is located, rather than the property itself.
It would likely mean higher property tax for those living in areas that are well serviced by public facilities, such as cities and towns with good transport links, relative to those in rural areas whose actual homes may be of higher value.
Party leader Eamon Ryan told The Irish Times it would be used to encourage denser housing development. Proposals for a site value tax were previously mooted by the Fianna Fáil-Green coalition of 2007-2011 and the Fine Gael-Labour coalition of 2011-2016.
However the idea met with resistance from the group tasked with formulating the property tax before its introduction in 2013, which felt it would be difficult to gain “public acceptance” of such a tax.
At present, property tax is levied at a rate of 0.18 per cent of the value of a home, with 0.25 per cent charged on properties valued at €1 million or more.
When assessing the tax, property values are sorted into bands, with each rising by €50,000 on homes valued at €100,000 to €1 million. The valuation rates have remained the same since the tax was introduced. Last April, the Government deferred any changes for another 12 months.
Minister for Finance Paschal Donohoe said his preferred way of reforming the tax is by broadening valuation bands and cutting the rate at which it is levied.
Mr Ryan said that his party wants more substantial reform. The Dublin Bay South TD said a move to a site value tax would allow the State “recoup” some of the investment it has made in facilities like transport in high density areas. He said there is also an “environmental benefit” to a site value tax.
Benefits of site value tax?
He said the level at which people would pay – and whether they would pay more or less – depends on the level at which the tax is set. The concept would have to be agreed in government first, and then "you'd have to get that through" the Department of Finance and the Department of Public Expenditure.
“It is what it says on the tin. It’s the value of the site rather than the value of the property. And one of the benefits of a site value tax is that . . . in thousands of different ways it encourages development back close to the centre, encourages more sustainable development.”
Mr Ryan added that it would also apply to “commercial buildings, industrial estates, all built environment. It recognises that investment the State makes if you’re living right next door to a really high-quality public transport destination. You got the benefit from that. That is identified in the value of the site. Some of that social investment that society has made is recouped back because you’ve got a kind of a systemic way of taxing on the basis of that value.”
Mr Ryan said the existing water-charging regime should remain in place, but there should be greater investment in waste water infrastructure.
“The water quality in the discharge of sewage and the overflow from the storm system and sewage systems is a problem. But we’ve set up a system now where there is a charge on water we use above a threshold. That was our original policy. We agree that there is a right to water and it should never be in private ownership.”