News Shane Ross

Saturday 23 August 2014

Shane Ross: Heavy gang tackles property tax

Shane Ross

Published 09/12/2012 | 05:00

  • Share

Michael Noonan is a decent skin. He shuffles slowly around Leinster House with a generous word for everyone. He reminds many of the Dail's inmates of their favourite uncle. While critics ask what on earth a 69-year-old schoolteacher is doing in Ireland's financial hot seat, no one has ever suggested that this avuncular minister has let power go to his head. He is level-headed and personally popular.

  • Share
  • Go To

Privately, Noonan would not hurt a fly. So it was disturbing to hear such a nice man sounding distinctly menacing last week. The late comedian Dermot Morgan (who made a career out of lampooning Noonan's nasal tones in the minister's first coming) would have enjoyed a field day after Michael's sudden descent into threatening mode.

The Finance Minister was asked about the cursed property tax that he is imposing on Middle Ireland. How was he going to ensure that the punters paid up?

Noonan suddenly looked sinister. He was obviously primed for the question. He declared proudly that he had hand-picked the enforcers.

Burnt by the experience of a widespread refusal to pay last year's household charges, he shot out of the traps with his response; but his first two words put the fear of God into me. "The Revenue" he responded on Pat Kenny's programme, will deduct the property tax from the wages of people who refuse to pay. And then, chillingly he displayed mighty muscle: the Revenue would be able to get an attachment order. Middle Ireland was cornered.

An attachment order is a means of enforcing the payment of a bill. It is a deduction from a debtor's salary or social welfare payment.

Suddenly there was going to be no more of Mr Nice Guy. None of that softly-softly local government collection of household charges. This time he was calling in the heavies.

He warmed to the prospect with a flourish, darkly declaring: "The Revenue know how to collect taxes and they WILL collect taxes and they are also being mandated to collect the arrears on the household charge."

The Government's legal hit squads will confiscate property tax from destitute homeowners' net salaries if they do not pony up voluntarily.

The choice of words was revealing. Not so much about Noonan's character, but about government thinking on the property tax. They are using strong-arm tactics to enforce payment. They had anticipated reluctance, resistance, even refusal. They knew that this could be the last straw. So Fine Gael and Labour have hired their own bouncers. To some Irish people the Revenue have the same whiff as the KGB have to Russians.

Refusal to pay tax is not in the Irish nature. We are a bit dilatory maybe, but are unlikely to refuse without good reason.

On the property tax we have good reason: inability to pay. Realising the danger of resistance through inability to pay, Noonan has taken an utterly ruthless line, deciding that he will simply lift the tax out of our pay packets. Or our pensions. Or our social welfare payments. This is rough stuff.

Property tax will mean that Middle Ireland, already struggling to survive, will be forced to look elsewhere for its household cutbacks. The middle classes will look at their monthly cheque and find, maybe on average as much as €40, stolen by the State. If a borrower's mortgage is not already in arrears he may, instead, cancel the standing order to his bank. Pensioners can always turn down the heat and freeze at night. Parents can always reduce their children's food intake.

Have Noonan and Brendan Howlin become totally detached?

The property tax, as imposed last Wednesday, is far more punitive than anticipated a few weeks ago. The 0.18 per cent rate is bad enough (0.25 per cent for houses over €1m) but the Government's refusal to allow waivers to those unable to pay is stunning.

Noonan made no concessions to those who had bought homes during the Celtic Tiger madness. It was widely expected that he would allow relief to buyers who had already paid tens of thousands in stamp duty. Why should they pay property tax on the double? Now some of them will sink.

So will others. The minister has made great play with his decision to allow those with pitiful incomes to apply for a "deferral". Homeowners earning up to €15,000 in the case of a single person and €25,000 for a couple, will be able to defer payment.

The "deferral" concession sounds almost sympathetic. Sadly there is a little catch: the low earners will be charged 4 per cent interest every year they do not pay up. Their debts will mushroom.

Apart from distraught young couples, the most likely victims of this new debt – "deferral" – are pensioners with small incomes, but medium-sized houses. First they will opt for deferral. Then they will accumulate debt year after year. Then they will die. Pensioners were once again targeted in the Budget, not only with the property tax but with restrictions on medical cards and trebling of prescriptions charges.

Michael Noonan is creating more debt. Is this the same man, who in his Budget speech, identified debt as the principal source of the economy's problems? Those unfortunate homeowners who opt for deferral will be in debt to the State. Pensioners' circumstances rarely improve. They are unlikely ever to be able to pay off their property tax debt. It will grow every year.

The State will call in the debt from the pensioners' estate when they die. Alternatively, a pensioner will be prisoner in his own home. Or, if he sells it, the State will have first call on the proceeds. Then he will be forced to move downmarket.

This piece of pensioner persecution is what Noonan so blandly calls "broadening the tax base". Which is just about as misleading as his fig leaf to the Labour Party, cleverly spun as the "mansion tax".

The Budget did not broaden the tax base. Instead, it piled extra taxes on to the overburdened backs of the same narrow bunch of middle-class people. Those who cannot pay their property tax are exactly the same people as those whom the State has already milked. The young couple with the big mortgage will often have children. Their child benefit has been stripped to the bone. Their motor tax will go up. Their PRSI will rocket. The cost of education has been hiked. Far from broadening the base, Noonan is drinking from the same well. He is merely taking out the last drops of water.

A government attempt to confuse and to disguise the unfairness of this assault on the middle classes has already failed. Fine Gael's sops to the Labour Party have fooled nobody about the brutality of the Budget. Among the sops to Labour are the so-called "mansions tax" – which will raise little revenue, and an increase in capital gains tax at a time when capital gains are as likely as the second coming. A few crumbs thrown in Labour's direction will not put bread on the table of middle Ireland.

Michael Noonan should call off the heavies. Middle Ireland has endured enough.

Sunday Indo Business

Read More

Don't Miss

Editor's Choice