Saturday 14 December 2019

Brendan O'Connor: House tax just a way to screw more from the middle classes

The coping classes may end up having their own little quiet revolution next time they go to the ballot box

Brendan O'Connor

Brendan O'Connor

So something seems to be working for Fianna Fail, which now, extraordinarily, seems to enjoy three-quarters of the level of support that Fine Gael does. Not bad for pariahs who ruined all our lives, and are, if you listen to the current Government, still the cause of all our problems.

It has been difficult for Fianna Fail to criticise the current Government with credibility, seeing as it can always be thrown back at the party that it is Fianna Fail policies we are pursuing now. Even before there was any bailout, most of this stuff was in Fianna Fail's four- year National Recovery (2011-2014) plan anyway.

But Fianna Fail has a couple of very credible points to make in its opposition to the property tax. Firstly Fianna Fail TDs point out that timing is everything and, while they were the ones who agreed to the notion of a property tax with our paymasters, this is not the time to introduce a property tax.

The idea of raising a substantial tax on something which is, at the time of introduction, a liability to the majority of people in the country, is just not right on any principle of taxation or of morality. Half the people in the country are now in negative equity. They owe more on their houses than the houses are worth. They have lost their deposits at least, and most have lost much more than that. Many of them are worried they will never get out of the hole their house has put them in. And that's without even thinking of all the ordinary people who own investment properties that are worth a fraction of what they bought them for.

Most of those people also paid huge stamp duty to the Government for the privilege of buying property. Many of them borrowed the money to pay the stamp duty, so that stamp duty now constitutes part of their negative equity.

Clearly this is not the time to tax what is for up to half the population a fiasco they would willingly walk away from if they could. If we cross this line of taxing people for liabilities, what other liabilities will we start taxing people for? A tax on children? Illness? Disability? That's the logical extension of this principle, if you take it to the ridiculous.

Of course, the Government will tell you that this is not in fact a tax on property but a tax to pay for local services. To which you would have to say that if it isn't a property tax it was very foolish of the Government to allow it to be called that, because property is a very loaded word for people these days. Secondly, no one believes that any of the taxes taken off us go to any specific areas these days. The way most people see it, the Government just takes as much as it can from us and then it all goes into the pot. The Government pays public sector pensions out of current money, it robs the State pension fund whenever it can get away with it – in short, there is no such discipline these days as money being designated for particular things.

The second point that Fianna Fail has been making is that what it proposed was a site valuation tax, not a tax based on the price of your house. Because, as everyone accepts – even Fine Gaelers in Dublin – a tax based on the value of people's property means that someone living in a 1,000sq ft house in Dublin, and availing of the same services (which are probably cheaper to provide in Dublin due to economies of scale and population density), will pay two or three times what someone living in a 1,000sq ft house down the country pays in property tax. So essentially this is a tax that will penalise people hugely for living in Dublin.

This tax and the way it is structured suggests this Government wishes to disincentivise people from living in Dublin, that it wants people to move out of Dublin. But of course this is not the case. Dublin is our capital city where most of our big enterprises and most of the arms of Government are based. So we do actually want people to live here. So then why penalise them for it? Well, essentially because there is no thought or strategy or sophistication gone into this, it is all just part of that great mantra "broaden the tax base". In other words, find more ways of getting more money out of more people using whatever excuse you can.

The thinking on this occasion is roughly: most people have a house, don't they? Well, tax them then.

As Stephen Donnelly pointed out in this paper before Christmas, property tax is neither a tax on wealth (because if it was, people in negative equity wouldn't have to pay it), nor a tax for the provision of local services (because if it was, people in Dublin would be paying less because their services cost less to provide). So it's a desperate, made-up way to screw more money out of, primarily, the middle classes, and primarily the Dublin middle classes, by a Government that is afraid to increase tax by 3 per cent on earnings of over €100k when everyone pretty much agreed that no one was going to argue with that.

As Fine Gael watches Fianna Fail creep up behind it despite Fianna Fail being the party that ruined everything, Fine Gael would do well to remember that Fianna Fail had been completely wiped out in Dublin. Fine Gael and Labour are now directly attacking Dublin people with an unjust tax, which is targeting them for twice or three times the tax someone in an equivalent home is paying down the country. Dublin people, remember, generally have bigger mortgages and bigger negative equity and now they are being taxed more for being more in the hole.

And apart from the odd Fine Gael TD making a bit of noise while they shuffle along to vote for the property tax, the only people standing up for Dublin homeowners, apart from various lefties and independents who are against everything anyway, are Fianna Fail TDs.

Fianna Fail TDs are the only ones from the mainstream establishment really hammering home this injustice. So while the property tax might not bring the Dublin coping classes out on the streets, they might have their own little quiet revolution the next time they are going to the ballot box. Because the property tax is not going to go away. Once a year, every year, everyone in Dublin will be reminded how unjust it is. And that includes election years.

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