2016 will be a big year – in more ways than one
Taxation once again – 2016 is going to be significant for more than just the 100th anniversary of the Easter Rising. Towards the end of that year, householders are going to learn how their bills for two of the most contentious austerity measures of the bailout era will hit them the following year.
The valuation period for the property tax, based on how much the house was worth in May 2013, runs from 2013 up to 2016. Thereafter, from 2017 through to 2019, homeowners are supposed to pay their property tax based on the value of their house in November 2016.
However, the rise of the property market means homeowners are facing sizably bigger bills. The Central Statistics Office confirmed that June’s monthly increase of 2.9pc nationally was the highest since the property index began in 2005 so the concerns of homeowners about the impact on their property tax bills are obvious.
Ministers are listening and are weighing up whether to announce a property tax freeze in Budget 2015 as they want people to have “clarity” about what taxes are coming down the track. Finance Minister Michael Noonan and Public Spending Minister Brendan Howlin have already been talking about delaying the revaluation period until there is a “bedding down” of the market.
The lack of supply will continue to push prices up – but buyers face anything up to four more years of housing shortages with rising prices before enough homes are built to meet demand.
Taoiseach Enda Kenny says it will take two years for the Government’s policies to increase housing output to make an impact, but AIB chief executive David Duffy estimates the supply problem will remain for four years. The uncertainty over property taxes is creating anxiety, which can affect consumer sentiment.
The Labour Party is pushing for a freeze, with the revaluation in 2016 to be postponed – but Fine Gael is less certain it’s a good idea to signal such a move at this stage as it’s too far out to know where the market will be at.
On water charges, there is also a lack of clarity around future bills. The charging regime currently being finalised will run until the end of 2016 – but there is no guarantee water charges won’t increase after 2016. Of course, a general election is due in early 2016, assuming the Coalition lasts its full term.
The Government wants the voters to be focused on tax reductions, not fixated on hikes in existing taxes. Expect property taxes and water charges to feature prominently in the campaign.