independent

Wednesday 16 April 2014

Charlie Weston: Latest hardship will push many over the edge

WITH the continuing crash in house prices and the squeeze on incomes, the revelations that homeowners will be hit with a property tax of up to €600 a year will be about as welcome as a burst pipe in the bathroom.

The average three-bedroom, semi-detached house will end up being billed for €250 a year under provisional plans drawn up by the Government.

That may be modest by international standards, but our peculiar relationship with property in this country means that this tax will be deeply resented.

Even if it is low, this property-tax hardship will only pile the pressure on households.

Nearly one-quarter of Irish people have less than €20 a week to live on once all of their essential bills have been paid, a recent Irish League of Credit Unions survey found.

The new tax is expected to be self-assessed, with homeowners given guidelines on which valuation band their property falls into. In other words, if the value of your home falls into band X, then you pay €200.

The highest figure for the tax will be €600, meaning that mansion owners will pay the same as a family that needs a large home for six children.

Dublin homeowners will be the big losers, as their properties are usually more valuable than those in rural areas.

Many of those asked to shell out for a property tax will be among the around 350,000 people who are in negative equity.

And the figures from the Central Statistics Office yesterday, showing that the pace of property price falls has picked up, will mean more households going into negative equity.

These are the very people who bought for big prices during the housing boom. Now they will not be happy about ponying up up to €600 a year in property tax. Then there is our distinctive relationship with property in this country. A property tax is essentially a wealth tax, but our attachment to property and our bitter current experience of boom and bust mean we will not take kindly to having to pay a tax on our homes.

Never mind that a house or apartment is an asset, property prices are likely to still be deeply depressed by the time the tax comes into effect in 2014.

It is almost 35 years since domestic rates were abolished, which means that the property tax is essentially a new tax.

Irish Independent

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