When I heard that Dublin City Council was considering a tax on undeveloped sites I nearly choked on my coffee. The introduction of the Local Property Tax was contentious, for many it was contentious not because we were being taxed but because of ‘how’ we were being taxed.
That’s because a sizeable group of people believed that a site value tax would be a better alternative. Our government promised this on page 15 of their programme for government where they stated that they would ‘consider, arising from the previous Government’s deal with the IMF, various options for a site valuation tax‘.
That the Local Property Tax isn’t even going to local authorities this year is a serious snub, but to then turn around and in the same year see a Council look for a separate and additional tax on sites only demonstrates that we are collectively mistaken in adopting a property value tax. This ‘new tax’ which will discriminate, cost to implement, increase complexity and perhaps not even work because if it goes ahead it could be badly implemented, is merely a sad and distant second place to the tax we were meant to get.
The other issue here is that it will embed cost into developments because what Dublin City Council are not saying is that they will waive their contributions schemes in return for this. That’s the lump sums that councils charge developers, this isn’t being taken away as the local property tax gets brought in, instead the LPT is ‘in addition to’ this. Meaning councils are getting paid twice, if they tax sites they will be getting paid thrice and Joe Soap will be scratching his head as to why property doesn’t get developed or is turned into a car park instead of a house.
In short we are going to look at initiating a new tax which would have done what the tax we were meant to get anyway was going to do. Wouldn’t it have made more sense to just do the right tax from the very outset?
— Constantin Gurdgiev (@GTCost) August 6, 2013
Ridiculous perhaps? One would certainly think so. A site value tax from the outset would have been the right choice, it’s the tax we were promised, it’s the one that is recognised to have the best set of incentives. For Dublin City Council to look for it as a standalone though is a joke, it means they get the new levy, a c. €130 per metre contribution on houses built then an annual local property tax as well?! That’s gouging at it’s most cynical.