Households facing new property tax in Budget
Self-assessed levy could raise around €2bn for Exchequer
A SELF-ASSESSED property tax is being seriously considered for December's Budget.
Such a move would immediately raise billions for the State's coffers and foist another tax on homeowners.
The amount of tax would be based on the value and size of the property, the Irish Independent has learned.
Adding to the burden is the possibility that homeowners would have to pay for their houses to be professionally valued so they could make a more accurate assessment of their worth. Under the plans -- which are at an early stage -- homeowners would pay from €250 a year for lower-valued houses to more than €3,000 a year for much pricier houses in the more sought-after areas.
While politically contentious and potentially damaging for the Government, such a tax would raise badly needed revenues -- and do so quickly.
Finance Minister Brian Lenihan said at the last Budget that the Government would consider a property tax but no details have emerged since.
The Government is currently borrowing more than €50m a day just to balance its books and has already said it needs to seek cuts of at least €3bn in December's Budget.
The move comes on the heels of the €200 'second property' tax which has garnered a lot of badly needed revenue.
This fee, which is paid to local authorities, is levied on properties such as holiday and second homes.
When it was introduced early last year, the Government estimated it would raise €40m but it had already generated more than €50m by the end of 2009.
There are still a number of questions about how the property tax would work, be implemented or policed.
However, it is understood self-assessment would involve homeowners getting professionals to value their properties.
Property owners could make payments due to their local authorities, as is the case with the second home tax.
The attractiveness of such a scheme for the Government is that it would be the fastest way to raise money.
Another option would be the Government Valuation Office assessing the value of properties around the country.
However, that could take more than a year and would not be ready for introduction in the next Budget.
Earlier yesterday, a Dail committee heard that the introduction of a property tax would have the potential to generate between €1.5bn and €2bn per annum for the Exchequer.
Don Thornhill, who advises the Government on competitiveness, told the Committee on Enterprise that introduction of the tax would be a key to generating revenues for the State going forward.
He said the introduction of a property tax could be offset by continuing mortgage interest relief.
He added that there could be exemptions for those who could not afford such a tax, including some people in negative equity.
"There is the potential to exclude hardship cases but I'm not sure that that should include people in negative equity on salaries of say €150,000 a year," he said.