A Property Tax is Necessary to Restore our Public Finances
We cannot continue to spend more money than we take in in taxes. We are still borrowing about €1 billion/month and we still have to reduce the general government deficit to below 3% of GDP by 2015.
A Property Tax is a responsible way to reduce this deficit. The OECD, Commission on Taxation, & ESRI agree that a property tax is less harmful for the economy than other taxes.
The rate of the property tax will not be increased in the rest of the term of this government, after it becomes fully operational in 2014.
The Government’s Property Tax is Fair
It is progressive with more expensive houses paying more tax in cash terms. This is because the tax is a percentage charge of 0.18% of the house value.
A further progressive feature is a higher rate in the tax, with houses worth more than €1m paying a higher percentage rate of tax, of 0.25%. This higher rate enables a lower standard rate of tax for everyone else.
A property tax is a form of wealth tax. Property is the main form of wealth for most people and the best one to tax as property cannot be moved abroad.
An annual recurring property tax is standard in other developed countries.
The Property Tax & Special Cases
A system of voluntary deferral arrangements for owner-occupiers will be implemented for cases where there is an inability to pay, where gross income does not exceed €15,000 (single) and €25,000 (couple).
For income stressed owner-occupiers who have an outstanding mortgage, an adjusted gross income limit will apply such that 80% of mortgage interest can be subtracted from gross income in determining inability to pay.
Interest will be charged on deferred amounts at c.4% per annum. The deferred amount, including interest, will remain a charge on the property.
There are some exemptions from the LPT such as houses in certain unfinished estates, and a 3 year exemption from property tax for buyers of new homes & first time buyers.
Fianna Fáil & Sinn Féin are Hypocritical in their Opposition to the Property Tax
Fianna Fáil would keep the household charge, which the government’s property tax replaces. Thus FF would actually have a property tax but they favour a flat charge where everyone pays the same amount regardless of the value of the house.
Sinn Féin’s vehement opposition to a property tax in the South doesn’t appear to be shared up North. Sitting in government in Northern Ireland, SF agreed to an increase in household rates of over 10% from 2011-2014. This is on top of existing high tax levels: a house worth £200,000 in Derry will pay rates of over £1,500 (STG).