Tuesday 15 October 2019

Mark Keenan: Years of blunder led to tonight's deadline on property tax

Despite the protests, tonight’s midnight deadline has arrived
Despite the protests, tonight’s midnight deadline has arrived
Mark Keenan

Mark Keenan

MIDNIGHT tonight sees Ireland being dragged into a new era, as thousands of us resign ourselves to registering online for the local property tax before the final deadline passes.

By tomorrow, the vast majority of Irish homeowners will be registered to pay a home-based tax for the first time in 15 years – a tax payment of the sort considered normal everywhere else in the western world and deemed an essential ingredient by almost all nations in securing a stable tax system. We've been dodging it for a decade.

And were it not for the troika making LPT a condition of our 2010 bailout agreement (and in the process giving both governments somebody to blame), the line might not have been crossed at all, given the reluctance of successive governments to grasp the nettle.

Former Taoiseach Bertie Ahern, who abolished the last property tax as a 1997 election promise, has since admitted that its ejection was "a mistake".

Indeed, the long road back to property tax in Ireland has been strewn with mistakes, cock-ups and gaffes compounded by the ineptitude of two successive governments eager to dodge the political blame attached to the reintroduction of such an unpopular tax.

The mistakes started with the loose value-based self-assessment system they finally settled for.

The lack of defined rules governing what can and can't be used to write down home value (proximity of a farm yard, for example) and the lack of guidelines for valuing one-off homes where there are no comparable properties (a typical situation in rural locations) means that the Government has opted for a model prone to the exact same systematic abuses that plagued the last property tax regime.

This allowed rural owners to pay little while city dwellers coughed up 75pc of payments in 1997 despite accounting for just over one-third of all homes.

The lack of detail on write-downs means the Revenue is operating a "pay now and we'll sort the details out later" approach, which can only backfire as homeowners by nature do their utmost to reduce their liability.

The next big gaffe came in the form of the national property price register itself – the independent database of prices necessary for homeowners to make their value estimates. Back in 2009, the Commission of Taxation estimated such a database would take "a couple of months to set up". When it was finally delivered – three years later – we discovered that it was of marginal use for property valuation, its core purpose in the first place.

The register contains no indication of dwelling type (every property is listed as "second-hand dwelling house/apartment") and there's no data on size or condition – vital for estimating value.

The Property Services Regulatory Authority (PSRA), which designed the register, also seems keen to tell us just how useless it is.

The website landing page warns that the data has mistakes running through it because the "PSRA does not in any way edit the data, it simply publishes, in a fully transparent manner, that which is filed".

They also note: "It is important to note that the register is not intended as a Property Price Index." But what's it for, if not an index of property prices?

Since then, we had the big hole in postal valuations – in March, we learned that thousands of homeowners would not get the vital base valuation figure they required by post.

We had the inept blunderbuss targeting of the homeowners themselves – which included misdirected bills hitting everyone from underage children to the deceased. We saw one soldier billed for all of Cathal Brugha Army Barracks.

Finally, just weeks ago, we had the scandal of the gardai being called in to investigate an attempted fraud involving the credit card details of at least 11 members of the public.

Their details were compromised when it was discovered that a worker at a Cork-based outsourcing firm, hired in to man the property tax helpline, had been illicitly taking down credit card details.

The ridiculous outcome of this was that the Revenue Commissioners was forced to set up a special helpline to help those who had been put at risk by their original helpline.

So we appear to have got there in the end – albeit with a "suck it and see" property tax model introduced before all of its issues have been properly answered.

Now all they have to do is get the money in.

Irish Independent

Today's news headlines, directly to your inbox every morning.

Don't Miss