Property tax dilemma

 

Sir, – A solution to the Government’s dilemma over increasing property taxes due to house price inflation may be found in California’s proposition 13 amendment to the state’s constitution, passed by plebiscite in 1978. Under this rule annual property tax is capped at 1 per cent of property value, but crucially the value is indexed to a base evaluation assessed for 1975 which increases by a maximum 2 per cent per annum, unless the property is sold or substantially renovated.

If sold or renovated the new purchase price or valuation after renovation becomes the taxable value, and is indexed going forward.

The attraction of such a policy is that if one can afford to buy a house at an inflated price, one can also afford the tax, and long-time owners and retirees are not unduly penalised. Also, such a tax would exercise downward pressure on property price inflation.

A variation on the 2 per cent annual indexation could be to use the annual cost of living index.

Food for thought ! – Yours, etc,

KEVIN CLEARY,

Dublin 6.