2nd July 2012 | Uncategorised

Government to give up on the most progressive form of property taxation because it would be too much effort


Government to give up on the most progressive form of property taxation because it would be too much effort

We have learnt nothing from the crisis, the only reform we see is a return of the ‘permanent government’ to power.

The Sunday Times reported yesterday that a review group is to recommend that the Government abandons its commitment to introduce a ‘site value’ property tax and instead introduce a tax based on the value of a household property. The site valuation system has been advocated by the OECD1, the Irish Planning Institute2, and by a range of environmental groups3 because such a system encourages better use of our land as well as promoting fairness and competitiveness.

The Taxation Commission recognised that there was a ‘strong economic rationale’ for a site value tax, but was reluctant to recommend its immediate introduction due to the administrative difficulty in compiling a database of land ownership in Ireland and explaining it to the people. That obstacle was overcome when the last Government decided to proceed with site value taxation and commissioned the civil service to start the necessary survey work. Two years later, the administration system seems to be back in charge, recommending against Site Value Taxation for no other apparent reason than the effort that might be involved.

Green Party leader Eamon Ryan said: “Come what may, we need to raise some €3 billion in new taxation measures over the next three years, just to meet day-to-day bills in health, education and social welfare. If we rely too much on income tax, we will make the country uncompetitive. If we raise it from consumption taxes, it will be unfair on the poor. It makes sense then to put some form of tax on inherited, non-productive wealth, and in Ireland that must mean the introduction of a property tax.”

“This Government is making a hames of that most important task. They got it wrong in the way they introduced a household charge and they appear ready to make an even bigger mistake by abandoning their own commitment to a site value tax. The alternative property tax will raise money, but it will continue the model that gave us urban sprawl, ghost estates and the dysfunctional delivery of local services.” he continued.

“The independent economist Ronan Lyons has already shown how a site value tax could be introduced quite easily4. Such a tax would encourage better planning and fund local services in a way that is fair and efficient. The debate between site value and property value tax has been framed as rural against urban, but the truth is that good planning makes sense for everyone. We have a once in a lifetime chance to learn the lesson from the boom and bust, but this Government seems set to blow it.”

“Our administration system opposed site value taxation because it involves a lot of work updating our land registry and valuation systems. They oppose it in the same way they are against the integration of the social welfare and tax systems, because there is a natural tendency to protect existing working arrangements. The only real political reform we are seeing at the moment is are turn of that ‘permanent government’ to power. By holding out against the most progressive form of property taxation, we will all pay more in the end,”concluded Eamon Ryan.

1 http://smarttaxes.org/2012/04/25/oecd-on-property-taxes/

2 http://www.irishplanninginstitute.ie/images/uploads/IPI_Submission_on_Property_Tax.pdf

3 http://environmentalpillar.ie/files/2012/04/Environmental-Pillar-Submission-Interdepartmental-Group-on-Property-Tax-March-2012.pdf

4 http://www.irishplanninginstitute.ie/images/uploads/IPI_Submission_on_Property_Tax.pdf