Property tax paying bondholders?

This was something that broke while I was on annual leave, it’s really infuriating to see that the property tax which was meant to be a fresh start for local authorities funding is (for 2013) not going to be given to them.

While a politician will always find a way to wiggle out of being called a liar, it’s pedantic to the extreme to think that the public would have realised that it was only going to local government from 2014 and not from the outset. If that was common knowledge it wouldn’t have made a headline so recently.

Given that this is bad outcome it does have to be balanced, and saying that the money is ‘going to bondholders’ is populist nonsense. If it is in the general expenditure coffer then it could go anywhere, you could equally spin the story that it’s going towards cancer wards in hospitals, that it is going towards supporting the homeless or anything else.

The tragedy here is that on the …

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Mansion tax? My arse! Mansions that won’t be paying the ‘mansion tax’

I thought it would be interesting to look at the ‘mansion tax’ and post some houses that would be considered by any metric to be a mansion that won’t be paying it. This is just a way to help demonstrate that the idea of a ‘super tax’ is a carrot used to make everybody else feel good about getting their bill.

First, the well known singer Shane Filan’s (Westlife) house, described as ‘a magnificent contemporary mansion home with impressive accommodation and almost five acres‘. It is 9,500sqft, has five bedrooms and five bathrooms. The entire second floor comprises a bar and entertainment lounge together with a sun room area, cinema room and a small office. Amazeballs, MTV cribs eat your heart out! But at a price of €990,000 it won’t be paying any ‘mansion tax’.

Or what about the following 12,000sqft house, it was the family home of the Jameson family (of whiskey fame), this is a 12 bed, fabulous period house. To buy the actual materials that make up this house …

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Making property tax relevant to local expenditure

Patrick King of Dublin City Chamber and I presented a paper to the Dublin Economics Workshop this year about how we could match a property tax with local expenditure so that it doesn’t become a transfer mechanism or general revenue raiser.

It would put power into local authorities, maximise incentives to do things in a cost efficient manner, and make it fair and relevant locally so that you aren’t comparing values of a house in Dublin 4 with one up a mountain in Lietrim.

By having no relationship to the actual costs of running a local authority we will instead opt for something that is bound to cause trouble in the future… the presentation is here.

We are going to publish a full paper in time, we never did get a chance to move to a more serious platform with the research, but what it did do (at least …

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‘Wat’er rip off! Yet another downside of market value based property tax

Not linking a property tax to the cost of running a local authority means we will have no idea of exactly what we are paying for. When it comes to how local government is funded it works (in simple terms) as follows, you have their costs, from that you take away ‘goods & services’ – this is income the local authority generates. Then you reduce it by the pension levy (local government workers fund this), and after that you traditionally had the local government fund and grants.

The local government fund is made up of car tax for the most part, and until recently it was a key component of funding, it was partially replaced by the household charge and the last portion of funding is made up of commercial rates.

The Dublin City expenditure position is below, note that a sizeable portion of it is spent on water, almost 16% – which is a significant cost.

An issue with a national market value oriented …

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Dublin Chamber of Commerce on Property Tax

Dublin Chamber sent out an email yesterday with their opinion on introducing a property tax which we wholeheartedly agree with, a National Tax system will simply gouge some while subsidizing others and it belies the facts of costs which must be considered in delivering the services this tax is there to cover.

(from this point on it’s their release)

The Government’s plans for a property tax will fail unless it is applied locally, says the Dublin Chamber. The Dublin Chamber supports the introduction of a value-based property tax but believes that such a tax should ensure that the value of a property is set against local norms.

“The principle we set out in our submission on property tax was aimed at achieving regional fairness,” said Gina Quin, Dublin Chamber Chief Executive. “In doing so, the Government could ensure higher bills for those with bigger or higher valued sites so that neither urban nor rural households are unfairly targeted through a national system.”

“Location is a key component to a property and the government could see history repeat itself if they …

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TV3 Viewers: The good things about a Site Value tax

We are posting this for viewers of TV3’s ‘The Morning Show’ with Sybil & Martin, it covers some of the main advantages about Site Value Tax.

1. It is widely agreed that we need to spread the tax base to reduce taxes on employment to be replaced by taxes on assets, and to create a less volatile tax base. This can be achieved with Site Value Tax. In terms of ‘fairness’, it is important to remember that only 50% of properties in the country have a mortgage on them, and for that reason there is also taxable capacity in the market for this, in conjunction with a reduction in income taxes.

2. The Site Value Tax currently included in the Four Year Financial Recovery Programme, is such a tax. It applies only to land zoned for development, or already developed.

3. Land is a fixed asset. A high proportion of its value is dependent on its area, its location and its proximity to related infrastructure. Infrastructure which is created via public expenditure but rarely ever re-captured for the value it …

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