Saturday 25 January 2020

Property tax a 'perfect fit' for black hole left by Anglo

Cost of bailing out 'world's worst performing bank' will be huge, writes Ronald Quinlan

THE cost of bailing out Anglo Irish Bank? At least €22bn. The predicted annual income from residential property taxes? €2bn.

It doesn't take a genius to figure out the connection between the above figures. The non-geniuses amongst us have already been doing the maths, as they say.

Put simply, we the little people who pay our way will soon be paying property taxes to fill the gaping 'black hole' left by the bank that Seanie FitzPatrick built and broke.

And we will be paying this tax on all our houses for many years to come, at the very least. Indeed, even if Anglo 'only' ends up costing the taxpayer the current estimate of €22bn, it would take 11 years of property taxes to foot the bill.

Given the sheer size of those figures, one might think Taoiseach Brian Cowen would at least have the courtesy to let the Irish taxpayer know that this is the Government's plan before proceeding to bleed homeowners dry to clean up the multi-billion euro mess that Anglo represents.

So dire is Anglo's performance, the now-nationalised bank even managed to secure the dubious title of the 'world's worst performing bank' in 2009, according to the results of a survey reported in the most recent edition of the prestigious financial journal The Banker.

And while Mr Cowen, unsurprisingly, "refuses to be drawn" on the matter of the property tax, the level of detail which leaked out last week in relation to the Government's thinking should be enough to provoke outrage from the country's homeowners.

According to the 'kite' being flown by officials at the Department of Finance, the Cabinet is very much taken with the idea of applying a 0.3 per cent tax to houses across different valuation bands.

Translated into plain English, and into the threadbare pockets of an already financially abused and dwindling workforce, that would see the owners of houses with values of up to €155,000 paying an annual tax of €225 and owners of houses valued between €150,001 and €300,000 paying €675.

So far, so disturbing, you might think. But it gets worse.

According to the latest leaks coming from the mandarins on Upper Merrion Street, owners of houses valued between €300,001 and €450,000 would be forced to cough up annual property tax payments of €1,125, while those with homes valued between €450,001 and €600,000 would have to hand over €1,575.

Anyone 'fortunate' enough, meanwhile, to have a home valued between €1m and €1.5m would be required to pay a property tax of €3,750 a year.

While some people -- government ministers for example -- might argue that these are just notional figures, it should be pointed out that they are based on options suggested in the report drawn up last September by the Commission on Taxation, a group which, incidentally, is chaired by one of Mr Cowen's closest friends and advisers, Hugh Cooney.

In terms of its timing, the reporting of the Government's plans to levy householders for having the audacity to keep a roof over their heads while all about are losing theirs, could not have been more unfortunate.

Just as Mr Cowen was looking forward to his lengthy summer holidays secure in the knowledge that middle Ireland was already being softened up for the introduction of property taxes in this December's Budget, along came Anglo Irish Bank to remind him just why it was necessary.

According to a global survey in The Banker, Anglo's 2009 losses of €15bn propelled it to the top of the list of the world's worst performing banks.

So dire was Anglo's performance in 2009, it even managed to outstrip the US lender Citigroup the world's largest bank, in terms of losses for the year.

According to the results of the bank survey, Citigroup only managed to lose half the amount of money Anglo did in 2009. Banking behemoth Royal Bank of Scotland, meanwhile, lost just a quarter of what Anglo lost last year.

Sunday Independent

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