| 6.8°C Dublin

T Coffey: Puppet leaders bent on imposing 'failed' tax again

Domestic rates pay-able to a local auth- ority existed until approximately 35 years ago, when they were abolished on virtually all houses (ie, less than £100 rateable valuation).



They had become onerous because they were struck by local authorities at a rate of x pounds in the pound, and the Seventies was a time of extremely high inflation, 25 per cent in 1975 alone.

Moreover, the rates disproportionately penalised people with modest incomes living in relatively large houses.

Take as an example Victorian houses in many parts of Dublin -- from the Thirties, rates on these houses caused them to be turned into relatively low-grade apartments, typically four flats per house while the mews houses degenerated into hovels. This, for example, represented the typical situation in Dun Laoghaire-Rathdown when I first came to live in the area in 1954.

Indeed, by the Seventies, many such houses, which are a very important part of the architectural heritage of the country, were virtually falling down while the back gardens had become rubbish dumps. The effect of rates in country areas caused the owners to unroof their houses so that far more of the rural architectural heritage was lost than even in the 1916-1922 period.

I remember going to my grandmother's funeral in Fethard, Co Tipperary, in 1960 and many of the fine houses on Main Street were unroofed, this decrepitude in the middle of the most prosperous agricultural area in the country. Any penal valuation or site value tax will cause this situation to occur again.

In 1983, the Government introduced Residential Property Tax (RPT), which applied to houses over £70,000 in market value (a nebulous concept at best since property prices tend to fluctuate dramatically) where the aggregate household income was more than £28,000. RPT did not affect many people until 1994, when largely due to the irresponsible lending policies of EU banks, house-price inflation skyrocketed. RPT, although much more flexible than the proposed measures, ultimately had to be abolished in 1997 because it would have forced many people out of their houses.

This modern version of dispossession struck a particularly emotive chord in Irish people due to our recent history where virtually nobody was allowed to own any land. Indeed, property taxation to bail out German and French banks is largely reminiscent of the Land Annuities of the last century.

It appears from his press release of January 31 that Minister for the Environment Phil Hogan intends to reintroduce some form of this tax following the advice of a committee -- some of whose members belonged to the body that introduced the failed 1983 tax.

Certain leading people in the trade union movement have rejected the €100 household charge. It should be borne in mind that under the proposals being discussed, there are many reports suggesting a charge of €1,000 per house if a comprehensive property tax is introduced, which will considerably impact on their membership.

Despite the glaring defects of the old rates system, virtually all of the charges for which we now have to pay -- such as refuse collections, rudimentary healthcare, water, etc -- were included in them and at least the revenue was spent in the area giving some measure of local control.

Attempts are being made to draw parallels with Germany and France in the area of property taxation. Irish people will probably not be aware that in virtually all of Germany it is possible to buy a reasonable house for about €70,000 -- even in Berlin -- which is an early Eighties Irish price. The same is true in France outside the main centres. Hence, the comparison with these countries is largely irrelevant.

This puppet Government, like its predecessor, seems hell-bent on implementing the socialisation of risk policy of the troika whereby, regardless of the cost to the citizen and historical sensibilities, the proceeds of taxation will be used to bail out German and French banks.

This is certainly true of the household charge and proposed property tax, where contrary to the stated aims in the government press release website, the revenue from such taxes will disappear into the bank bailout black hole.

William T Coffey is Professor of Electrical Engineering at Trinity College Dublin.

Sunday Independent