Property tax to be 'progressive'

 

Minister for the Environment Phil Hogan has insisted the introduction of a comprehensive property tax is essential but pledged it will be fair.

Mr Hogan confirmed last night the process of devising the tax had been speeded up, with an expert group due to begin work next month. The group will include representatives from Government departments and the Revenue Commissioners. The Minister said it would probably be chaired by the Department of Finance.

Speaking to The Irish Times, Mr Hogan said he hoped the expert group would deliver its report by next April or May. The Government was speeding up the process “in order to ensure that we’re ready to introduce it whenever we may wish to do so, and that could be 2013 or 2014”.

Mr Hogan said the introduction of a property tax should not be a surprise. “Well, it’s in the EU-IMF agreement, so it is well flagged by people. This has been negotiated by the previous government, so it shouldn’t come as a big surprise that we’re actually planning for a policy instrument that we’re forced to implement.

“Obviously we will be expected to produce detail about how it is going to be implemented to the troika in 2012.”

The proposal was attacked yesterday by Sinn Féin TD Aengus Ó Snodaigh as “yet another attack on low- and middle-income earners”. He said his own party’s proposed wealth tax would bring in €800 million, while exempting the less well-off.

Mr Hogan stressed the need for a progressive and fair system of property tax.

“The household charge is an interim charge and it has always been flagged as a flat charge, which is not progressive. So we are proceeding with the planning for the implementation of a progressive and fair property tax.”

Although the expert group is expected to report within four or five months, the Minister said the Government had not yet decided to bring forward the property tax by a year to 2013, instead of 2014 as originally planned.

“We haven’t decided anything yet, but it is an option that is open to the Government. We’re speeding up the process in order to ensure that we’re ready to introduce it whenever we may wish to do so, and that could be 2013 or 2014.”

When asked about the basis on which houses would be valued for tax purposes, he said: “I’m not going to second-guess what the expert group is going to do. They’re going to look at all the options. I’m only a politician, I wouldn’t have the necessary expertise to evaluate that.

“They will look at all the international experience.”

When asked if a house-purchaser who paid 9 per cent stamp duty at the height of the boom would now be expected to pay property tax, he replied: “All those issues will be taken into account by the expert group.”

Pointing out that the €100 household charge would be dropped when the property tax was introduced, he said that under the Fines Act 2010, anyone who refused to pay the charge could have their court fines deducted from sources of income, “whether it is wages or social welfare”.

Commenting on the proposed boycott of the charge by left-wing Dáil deputies, he said: “It is obviously an opportunistic occasion and a PR stunt”.

Meanwhile, after an intervention by the Competition Authority, the Irish Property Owners Association yesterday withdrew its recommendation that members should pass the charge onto tenants.

The authority warned the association that its actions were potentially in breach of competition law and said it would seek an injunction if the advice was not withdrawn.