Reforming the unfair property tax will give revenue back to communities
Published 04/05/2015 | 02:30
Various Government backbenchers, as well as the Taoiseach, have launched a coordinated attack on RENUA Ireland for committing to reform the unfair Local Property Tax (LPT) system which they introduced. Renua has committed to introducing equity to the LPT system, ring-fencing revenues generated for the provision of local services and for building a national social infrastructure, such as community creches and community care facilities for the elderly.
It is hard to understand why our proposals, which are designed to drive efficiency and transparency at local government level, are the subject of such outrage from the Government. It may, of course, have something to do with the fact that our proposal to move to a site value tax, is precisely what the Government parties promised in their own Programme for Government in 2011. Unfortunately, like so many of those promises, the Government has failed abysmally to honour its own commitment.
In the Programme for Government, those parties promised to "consider, arising from the previous Government's deal with the IMF, various options for a site valuation tax. Any site valuation tax must take into account the significant number of households in mortgage distress and provide local government with a reliable stream of revenue."
None of the stated goals have been achieved. Instead of a site value tax, the Government introduced a property value tax, which grossly discriminates against people residing in urban areas. It does not take into account the households in mortgage distress. Furthermore, it does not provide local government with a reliable stream of revenue. Instead, the revenue has been pumped shamelessly into the discredited entity that is Irish Water.
RENUA Ireland, is committed to addressing all of the shortcomings that exist with the LPT. We believe there is a fairer and more efficient way of delivering local services.
Our plan is to replace the current LPT with a new tax with two components, a zoned land charge and a site value charge. We want to create a direct link between funding local authority services, zoning decisions and property taxes.
The first element of the proposed LPT will be a zoned land charge that funds local government directly. It will be calculated by reference to the square metre charge for zoned land in that area and the cost of funding the local authority (after rates and special grants have been deducted). This progressive step will empower citizens to take charge of their local liability, which may include facilitating consolidation of the administrative functions of councils to lower residential tax liabilities in parts of Ireland.
We will direct local authorities to publish accounts in a coherent format so citizens can easily understand what they are paying for.
The second aspect of the LPT is a site value tax. This is in keeping with the recommendation of the 2009 Commission for Taxation to introduce a site value tax, which bizarrely, was completely ignored by the current Government.
Through this second element of the LPT, we will create a social cohesion fund from the site value charge. It will be used to develop social infrastructure across Ireland, such as community childcare facilities and community nursing homes.
Ultimately, our LPT proposal will do three key things. It will incentivise the development of appropriate residential housing on zoned land, thus helping to tackle the problem of land banking and the chronic shortage of housing, which is driving up house prices and locking young families out of the housing market.
It will create a direct link between revenue raised and the delivery of services for citizens locally. It will create real pressure to reduce waste in local government and will ensure that citizens are aware of how their taxes are being spent locally. The current centralised funding system ensures that there is no transparency and no incentives for the prudent use of taxpayers' monies by local authorities. This will change under the RENUA proposal.
Finally, by creating a central fund to develop a social infrastructure nationally, we will have learned the lessons of the past. During the so-called Celtic Tiger era, we were continually told that Ireland was the fastest-growing economy in Europe. What an indictment of our political system that the only tangible legacy of that period is a network of motorways.
Once again we are being told that Ireland has the fastest-growing European economy, yet once again, there is little or no advance planning for the needs of our society and our communities all over the country. Our proposed social fund will ensure that over the next 20 years, we as a nation will roll out a social infrastructure that will benefit all citizens, by providing creches, playgrounds, community centres, quality housing for the elderly and the disabled.
This is not aspirational, we have a clear plan to do it. Our agenda is long-term planning for our citizens' needs, rather than the politically expedient short-termism which successive governments, including this one, have offered. Our approach is different to the poorly thought-out populist strokes that our political parties have served up for many decades.