Garden is no bigger and neighbours are the same - so why pay more tax?
Published 19/10/2015 | 02:30
The last thing any Government wants to do before a General Election is annoy the voters.
So it is no surprise that a planned revaluation of homes for the Local Property Tax (LPT) has been deferred until 2019.
After all, many of the gains announced in last week's Budget would be wiped out if the full effect of property price rises were to be translated into LPT bills.
Given the noise about putting a week's wages back into pockets, it would be embarrassing in the extreme if the Budget boost were to be wiped out come January 2017.
To be fair, the Coalition inherited an awful mess when it took office in 2011.
A more sustainable tax base was a preferred solution to avoid similar mistakes in the future. But the problem with the LPT was it was rushed into existence by the need to get money in, and fast.
The current system is based on the property market. But when that market doesn't function properly, as ours certainly doesn't, it naturally lends itself to questions around fairness about how the tax is imposed.
Those living in a home valued at €350,000 to €400,000 - a typical starter home price back in the day - currently pay €675 a year in LPT.
In Dublin, these properties have risen by at least €150,000 - that adds €350 to the annual bill.
But nothing has happened to that property in the meantime. The garden hasn't miraculously grown larger. The neighbours haven't become any nicer. It's not hard to see why people would get upset at being asked to pay more.
The reason property prices continue to rise is a lack of homes coming on to the market, with a rental sector failing to offer secure tenancies and rent certainty.
That in itself is a failure of Government, and something that will take some time to put right.
But in the meantime, asking people to pay more is manifestly unfair.
It beggars belief that anyone buying a home is exempt from paying the tax, when many living with negative equity and currently paying a mortgage are forced to. It's even more galling that someone buying a €1m-plus home today won't pay anything for the foreseeable future.
The system should be flexible enough so people living in a property who are cash-poor can be looked after.
But more importantly, it should also structured to be fair and equitable, something the LPT is not.