€300 property tax to be phased in from 2012
Published 22/11/2010 | 05:00
A PROPERTY tax will not be introduced in this year's Budget, the Irish Independent has learned.
However, the tax will be phased in over two years from 2012, with the Government expecting to raise €500m between then and 2014.
With 1.7 million households in the country, this would mean a payment of just under €300 per home over the two years, although it is not yet known whether a self-assessment or flat-rate system is favoured.
The tax is being introduced part of the Government's four-year plan to cut spending by €15bn.
A phasing out of stamp duty is also on the cards, which the Government believes could make the public more agreeable to the tax.
The attractiveness of a property tax from the Government's perspective is that it can raise funds quickly at a time when it is spending €50bn a year but only taking in €31bn in taxes.
It is estimated that once a system has been fully implemented in 2014 it could raise over €1bn per annum.
Sources confirmed yesterday that the Government Valuations Office could also assess property values on behalf of the State.
If a self-assessment system were introduced it would add to the cost of the tax for homeowners who would have to pay for valuations.
Sources also indicated last night the unemployed or poor could be exempt from the tax.
The introduction of the tax comes on the heels of the €200 'second property' tax.
When it was implemented early last year the Government estimated it would raise €40m but it had already generated more than €50m by the end of 2009.
The Irish Independent has also learned the money raised from the new tax will be used to fund local authorities.
New figures show cash-strapped councils have been forced to lay off almost 5,000 workers in the past 18 months.
The job cuts follow a drastic downturn in local authority finances, which have been hit with huge falls in income from commercial rates, development levies and cuts in government funding.
New figures show some 4,992 jobs were lost between June 2008 and December last year in the country's 34 city and county councils.
Dublin City Council accounted for most of the losses, where 846 jobs were lost.
Another 600 went in Cork County Council.
Meanwhile, a leading housing body has proposed that charities should be able to borrow money from the banks to provide social and affordable homes.
The Irish Council for Social Housing (ICSH) said yesterday the initiative could provide 1,400 units for €14m per annum.
Under the proposals, the Government would invest in the plan and enter into a long-term lease agreement with the ICSH for the units.
The investment would repay the body's mortgage while rent collected from tenants would be used for the upkeep of the homes.