The link to the Thornhill report is here, it is the founding document of our new property tax
What will your property tax bill be?
The Department of Finance have put up a league table of how much less well off you’ll be depending on your property value. You can find it here but a snapshot is also below.
Irish Property Owners Association budget 2013 response
The Budget failed to address one of the key issues for landlords in the private rental sector, who are providing good quality homes for in excess of 600,000 people.
The so called Local Property Tax, billed for the funding of local services, should be collected from the people using the services under the “Users Pays Principle”. “This perpetuates a blatant unfairness in the system”, said Stephen Faughnan, Chairman of the Irish Property Owners Association. “This situation will inevitably result in rents having to rise, and represents another layer of of continuing unfairness.” Property Owners in the private rental market may now be forced to participate in an unfair tax code.
The only very slight crumb of comfort in the Budget for private landlords is that the inequitable Non-Principal Private Residence Charge and the Household Charge are being abolished, but their replacement with a Local Property Tax just continues the discrimination whereby tenants and a variety of others availing of local services do not have to directly pay for those services, unlike private home owners who may live next door.
In …
Talking property tax on WLR FM
We spoke to WLRFM yesterday (sound file here) about some of the contentious issues with a market value based property tax. Using values will ensure that the quantum collected is not strictly linked to any costs associated with running a local authority.
In the past this was a huge problem, it was the reason our last property tax died off, and when it came to domestic rates, it was used as political fodder in the 1977 general election where its repeal swung the election.
There are alternatives, Site or Land value tax and to have the tax linked to costs of a local authority would be far better, but we are instead opting for the path which suits the Government most rather than those who pay it.
‘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 …
Bank rates, onwards and upwards…
Something that is interesting is how people are amazed that banks are jacking up interest rates at a time like this… In fact, it is precisely because of the time we are in that they are doing it, and due to the market environment they face.
Banks have a choice at any time as to where they will put the money they hold, their job is to turn liabilities (deposits, debt, equity finance) into assets and at present there is a golden window of opportunity where any decent (almost any) assets can be lodged with the ECB and the ensuing liquidity recycled.
For the most part this has helped to support the bond market, part of the LTRO was based on this premise, but in Ireland while bond yields are attractive (still above 5%) mortgage rates are not as attractive. Currently the standard variable is less than 5% meaning a person can borrow for cheaper than the nation they live in is able to!
That won’t last, the likelihood is that sovereign rates …
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 …
RTE The Frontline: 23rd January 2012
Karl was asked to appear on RTE’s ‘The Frontline’ because of his support of property tax. This is ‘the wrong step in the right direction’ in his opinion. Less income tax with local authorities supported by a ‘Site Value Tax’ is the way to go in his opinion. It was not a popular opinion.
The solution for Section 23 Owners
Section 23 properties have had their tax treatment changed, in effect the buyer honoured their side of the contract from the outset and after the initiation of this the Government reneged on their side of it. This is contrary to the idea of fairness, the concept of contractual obligations, and it undermines the faith any taxpayer can have in the state.
The state recently cut many people with income tax and reductions in entitlements, but these were never contractual and people certainly didn’t leverage up to obtain them. Landlords may not be a group worthy of sympathy, but at the same time recent changes to taxation on rent (Case V income) mean the amount of financing expense the business can offset has dropped by 25% (mortgage interest you can offset has gone from 100% to 75%), this is contrary to the rules of accounting when you look at any other business.
The only solution is a reversal of this policy, and perhaps the only way to ensure this is to apply the idea of mutual …