Wednesday 13 November 2019

Eilis O'Hanlon: We're drowning under a torrent of charges

Just where do the Government and ESRI expect people to find the money to keep paying up, asks Eilis O'Hanlon

ENDA Kenny refuses to rule out cutting off the supply to those who don't pay water charges. In return, voters are refusing to rule out cutting off the supply of votes to those in Government who continue to patronise and bully them.

Water meters have not even been installed yet, and already the talk is of what to do with those who resist. It's the mindset of a government which does not expect its arguments to be believed, so is stockpiling alternative weapons in advance. Did it learn nothing from the household charge? Making it seem as if you're tooling up for a fight with the very people who trusted you will never look anything other than ugly, especially as plans continue for the full-scale introduction of an unpopular property tax next year. Though no worries there, apparently, as Lucinda Creighton promises it will be a "much fairer system". And we should be reassured by this because ... ?

The Economic and Social Research Institute (ESRI) agrees with her. Last week it issued a report advocating replacing a flat-rate household charge with a new property tax based on the value of each house. The figure being bandied about was €2.50 a year for every €1,000 of house value. Where does it think this money will come from when the latest figures show that most people now have no money left each month after paying the existing bills?

There's talk about "protecting those on lower incomes", but nothing for low-income pensioners except the prospect of deferring payment until after death, so that any money in their estate would whizz past their children and directly to the Department of Finance.

Householders in Dublin will be hit even harder because the fact that houses are more expensive in the capital is, bizarrely, to be regarded as a bonus, rather than an additional expense. As for middle- income earners who bought when house prices were at their peak and have now seen values drop to such a level that taxing what's left is merely adding insult to injury, well, don't ask.

Toss them a few extra tax credits maybe? That'll keep them quiet. If not, Enda can get out another big stick and threaten them with that too.

The ESRI can be added to the growing list of policymakers and opinion-formers who Just Don't Get It. The words "house" and "value" have ceased to have any meaningful connection in the minds of most homeowners. On the contrary, houses symbolise everything which went wrong for us. It was building too many houses and letting prices increase too fast which led to disaster, and it's the mammoth debt tied up in those houses which stops us moving on.

To still insist on the right to tax houses as if they were an asset when they are actually a liability is the root of all this discontent. It's like making a battered wife pay for the bar bill which her husband racked up before slapping her around. Those houses have broken up marriages. Caused suicides.

The truth is that people have already paid tens of thousands of euro in tax on their homes. It's called stamp duty. That the previous government squandered the money doesn't mean it didn't exist and doesn't matter. More to the point, it's still being paid for. Unless you're rich, the money to meet stamp duty is added to the total mortgage -- meaning that homeowners are still paying it back, with interest.

Few seem to grasp this unless they're in the same boat. A friend recently told a local TD the amount that he'd paid in stamp duty only a few years earlier; the elected politician was astonished. Olivia O'Leary -- praised in many quarters for her coruscating put-down of Minister Hogan over his handling of the household charge -- likewise gave no indication that she had given stamp duty much thought when, a few weeks ago, she used her regular audio essay on RTE's Drivetime to call on Irish people to grow up and pay up, pointing out that Ireland was one of the few countries where property is still not taxed.

Even in the US state of New Hampshire, where the motto is "Live Free Or Die", O'Leary remarked, they tax property. And it's true. They do. What she didn't mention is that New Hampshire has a so-called "real estate transfer tax" of a mere 0.75 per cent, on both buyer and seller. In Ireland, until the 2008 Budget, when rates were slashed in a vain effort to stimulate the property market, the stamp duty rate ranged from between three and nine per cent. Anyone who bought a house worth €500,000 during this period paid stamp duty at a rate of 7.5 per cent. In other words, they were forced to hand €37,500 to the government solely for the privilege of moving house.

Why should these people have to pay twice for a bill which they have every right to believe is already settled? That's the question which the Government, ESRI, et al, don't appear to want to acknowledge even exists. They murmur vaguely about possible reductions in the rate for those who paid stamp duty, but it will hardly come close to repaying the full cost of the contribution already made.

If that's Lucinda Creighton's idea of a "much fairer system", I'd hate to see what she considers an unfair one.

Sunday Independent

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