Property tax 'should be based' on size, area -- not values
Published 15/01/2010 | 05:00
A property tax should be based on a combination of the size and location of a house -- not its market value, the chairman of the National Competitiveness Council (NCC), Don Thornhill, said.
In its annual report, the NCC again recommends the introduction of a valuation-based tax on residential property. It also says that property prices should be left to find their own level, with no government attempts to prop up prices.
"Falling property prices bring long-term economic benefits. In this context, it is important that the actions taken by the banking sector and NAMA support an appropriate adjustment within the property market," the report says.
Dr Thornhill said the council had not considered the details of a property tax, and the floor-space idea was his own. "The tax would be based on a combination of the floor area and a valuation band, which would differ from one district to another. Differences in prices between districts vary less than actual prices themselves."
If such a tax averaged €1,000 per household, it would raise €1.4bn a year, he said.
The report also tackles the controversial Community Employment Scheme, which it says is not a good use of labour market support.
Mary Harney, as Enterprise Minister, ran into fierce opposition when she tried to limit the scheme, even though the economy was at full employment at the time. Dr Thornhill said that was a time when there was no pressure on public finances. "The imperative to look at such spending is greater now," he added.
The report adds that limited competition in the professions in Ireland has serious implications for the cost of doing business here.
"We don't seem to understand the importance of internal competition within the country," Dr Thornhill said. "Our cost survey showed that our business services, such as law and accountancy, are some of the most expensive in the world."
The report says that the Government should use its considerable purchasing power in professional services with agencies like NAMA to apply downward pressure on fees.
"There appears to be a preference for protecting existing suppliers over encouraging new entrants and promoting structural change," Dr Thornhill said.
He cited the lack of motorway service stations, the proposal to delay opening part of the M6 to protect local shopkeepers before Christmas, and limits on the floor size of discount retailers as examples of this mindset.
The report says recent falls in energy prices were necessary, but did not go far enough. Regulation should emphasise bringing non-fuel energy costs into line with other countries. It calls for a phasing out of price supports for renewable energy as its use increases and technology improves.