Property and taxation
Sir, – Harry McGee argues that the Opposition’s attitude to the property tax in Ireland is unusual in European terms (Analysis, June 3rd). Might this be because our Opposition consists not of socialist parties but purely populist parties? – Yours, etc,
BRENDAN O’ REILLY,
Sir, – Dr Tom McDonnell of the Nevin Economic Research Institute, quoted by Harry McGee, says that he “100 per cent favoured a property tax” and that the “problem with . . . a wealth tax rather than a property tax, (which) excludes the principal private residence, is (that) the residence is most of the wealth”. There is a fundamental flaw in this analysis. The accumulated wealth in a house is the current market value less the outstanding mortgage, which could be, and in many cases is, negative. Property tax is levied on the current market value only and so may be payable on a house which has no attached wealth at all.
Furthermore, Irish property tax disregards all land attached to a property above an acre, even if it is entirely amenity. This means houses on large amenity land holdings are totally undervalued vis-a-vis urban dwellings. Moreover this makes it very difficult for Revenue to question these property valuations on sale; the house and land sold together may realise far more than the owner’s valuation, but who can say what price the house on an acre would fetch?
The correct approach to taxing the accumulated wealth in a house is of course through changes in the capital and inheritance tax laws, especially eliminating the taxation exemption on profits arising from the sale of a principal private residence.
Dr McDonnell also writes that property tax is “a great way of funding local government”. However, it is clearly unjust that only house owners should pay for these services when the entire community benefits. For example, a house with a single earner of €50,000 will pay the same tax as the neighbour with four earners of €50,000 each, yet all are entitled to the same services. Property tax is an anachronism from the days when property ownership brought privileges such as the vote, and up to recently, the right to compensation payable by the taxpayer for malicious damage to that property. We now live in a society with equal rights and should all pay for services according to our means. – Yours, etc,
Greystones, Co Wicklow.
Sir, – With so much discussion of property tax, it will be a nice change to hear Irish people boasting about how little their homes are worth. – Yours, etc,
Sir, – One can agree to some extent with the assertion in your editorial that the local property tax provides a “sustainable source of funding for local authorities” (“An effective, progressive tax”, June 3rd).
However, for many people, in particular the many residents and business associations and Tidy Towns committees who now look after the environment in their local areas and pay for their rubbish removal, the real question is just what services does this tax provide funding for. Over the years, the powers of local authorities have been severely diminished by successive governments to the extent that the current system is regularly described as an overly centralised system with an almost complete reliance on exchequer funding for crucial areas such as local authority housing. Indeed, most of the important decision-making powers powers of elected councillors have been ceded to full-time officials and professionals. Local policy decisions are for the most part influenced by local TDs and are primarily dictated by national policies rather than local needs. Despite this, we still fund the salaries and allowances of 949 councillors at an annual cost of over €33 million. Perhaps that is where the focus should now lie. – Yours, etc,