Property tax payers will end up covering evaders' bill, says expert
THE property tax could end up being higher than it needs to be because large numbers of people are set to defy the law and not pay it.
This is likely to mean the average household that does pay the tax will have to pick up the tab and cough up €300 instead of €200, tax expert Christine Keily of taxback.com said.
Half of householders have not registered or paid the household charges and similar levels of evasion are likely with the new property tax, she said.
Registering for the household charge is needed by the Government to work out how many houses will be liable for the property tax.
Unless there is a major change by the end of the year, the country is faced with a situation where the compliant half of households will end up stumping up for the other half who are evading the household or property tax.
The International Monetary Fund (IMF) told the Government last week to set next year's new property tax at "a suitably high level".
Ms Keily said that in December, Taoiseach Enda Kenny said that the property tax would be expected to raise around €500m in annual revenue.
This is three times more than the household charge is expected to bring in.
She calculated that this would work out at a first-year average of €300 per house, based on a total of 1.7 million households.
But the tax expert said that based on the number of people not paying the household charge, the property tax is likely to have to average €500 per household to ensure that the Government hits its target.
"It is estimated now that just half of property owners who were due to pay the household charge have done.
"So it seems that those compliant households may be expected to fund the bulk of the property tax, unless the Government can pursue the remaining households to register and pay," Ms Keily said.
Part of the problem was a lack of information on the part of the Government on property ownership and its value.
"Most people are tax compliant on the basis that everyone else is too. If non-compliance becomes the norm for property tax, this attitude could affect other voluntary tax payments. This could impact exchequer returns," the tax expert said.
There are indications that the Revenue Commissioners may be used to collect the property tax rather than local authorities, which may mean higher levels of compliance.
Even if Revenue is involved, it is expected that the property tax will be hugely unpopular and evasion of the tax will be rife.
"Now it looks like those who were honest and registered for the household charge may essentially be punished because the Government will be able to impose a property tax on them, while they'll struggle to impose the tax on those who haven't registered," she added.
Minister for the Environment, Community and Local Government Phil Hogan said recently that data on residential property owners who have paid both the household charge and the charge on non-principal private residences was not yet available.