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Thursday 22 March 2018

Property expert calls for €625 tax on land instead of homes

Thomas Molloy

Thomas Molloy

THE Government should introduce a new kind of property tax which would cost an average homeowner around €625 a year, a leading property expert said yesterday.

The tax should be based on the size of a plot of land rather than the value of the building situated on it, Oxford-based Ronan Lyons told the Dublin Economic Workshop in Croke Park.

The Government has committed itself to raising money through a property tax because it is better than increasing income tax or VAT which is now close to the highest rate charged outside Scandinavia, he said.

"Three-quarters of Irish people's wealth is tied up in property, and yet it is untaxed. Those who argue for a wealth tax should support a site tax as it is effectively a tax on wealth."

The economist wants people living in Dublin to pay more than people living in the country and says that people with big gardens should pay more taxes than people with small gardens.

Such a tax, known as a site valuation tax, would mean that dozens of people living in an apartment block would pay the same as a single family living in a house built on a similar plot of land to the one used by the apartment block.

While this might seem unfair, it would encourage efficient use of land. Site valuation taxes also allow people to improve their homes without having to pay more taxes.

Such a tax could force old people to leave their homes but this might not be a bad thing as those homes are sometimes more suited to families, he said

Alternatively, the Government could allow the elderly to avoid paying the tax and then take the money after their deaths.

Mr Lyons dismissed the Government's plan to bring in a €100 tax on all houses irrespective of value this year as defeatist.

The Government says it is too difficult to calculate the value of individual houses but My Lyons said research from property websites and universities could be used to divide the country into different bands which would enable the State to impose taxes that reflect the average value of houses. A site valuation tax would be fairer and raise more money than the €100 charge.

It would also replace commercial rates and stamp duty. Current property taxes, which include rates and stamp duty, presently raise around €2bn a year.

A site valuation tax with an average charge of €625 could raise €3bn a year, he calculated. The annual charge would be around 2pc of the value of the site. It could eventually be extended to land which is zoned residential, farm and State-owned property, he added.

Mr Lyons conceded there is an argument for excluding people who have recently paid large amounts of stamp duty from the tax for some years.

Irish Independent

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