Fionnan Sheahan: Success of property tax lies with silent majority
Thirty-five years after getting rid of rates, the Government is finding any property tax is highly contentious. Within the Irish psyche, there is still a fascination with owning your own home. During the Celtic Tiger days, discussion of the spiralling prices of houses became a national pastime.
When it comes to paying a specific fee for the local services in the area where your home is located, homeowners are less enthusiastic.
The irony is the end of the property boom contributed to the necessity to bring in a property tax and water charges.
The erosion of the tax base and the high dependence on tax sources associated with property means the economic crisis has left a void.
The EU/IMF bailout deal required the Government to introduce a property tax from next year, which would be based on the value of a site.
Until sites were valued, an interim property tax -- the 'household' charge -- would be put in place.
The money generated would be used to fund services provided by local authorities such as libraries, fire services, and street lighting, but some could be used to fund the water metering programme which will begin next year.
The Government will also bring in a separate water charge, once houses are metered. In the meantime, the household charge covers both .
After spending the past six months softening up the public to the introduction of the household charge, Environment Minister Phil Hogan can be forgiven for being taken by surprise by the current furore.
The minister announced the €100 in the summer to avoid landing the new tax on an unsuspecting public as part of a Budget package.
Back then, Mr Hogan held a consistent line as he insisted his new flat-rate household charge -- a precursor to a property tax -- would come in next year.
The minister's statement of intent came following confusion created by Taoiseach Enda Kenny and Tanaiste Eamon Gilmore who said no formal decision had been made.
In an early example of the failure of government communications, Mr Kenny failed to back up Mr Hogan after Mr Gilmore cast doubts over the new tax.
But Mr Hogan maintained the new property tax-style charge would be introduced from January 1, 2012, even though Mr Kenny and Mr Gilmore were giving off different signals.
The Environment Minister also came under pressure at Cabinet to exempt many of those on low incomes from the charge. But this would have resulted in middle income earners paying more.
Of the 1.8 million households in the country, over 1.6 million will be paying the charge with a waiver for about one in 10 families.
Exemptions were confined to those in council houses, on mortgage supplement, getting assistance from the State to meet their payments and those living in ghost estates.
The tax will raise €160m a year, assuming all those who are supposed to pay do so.
Mr Hogan's problem is the measure was formally announced in the Budget and the legislation is passing through the Dail with the debates on cutbacks and tax hikes.
Although the measure was well flagged, the public only tend to really engage when a major change is upon them.
The experience with moves like the introduction of the plastic bag tax or the smoking ban was the same.
But if homeowners think €100 a year is bad, just wait until the fully fledged property tax comes into effect.
The average homeowner is expected to pay €200 to €250 a year in property tax when the permanent scheme is introduced in three years' time.
Owners of mansions will pay about €600 a year under the system.
The €100 household service charge, which will run for the next two years, will be the minimum faced by households when the property tax comes in.
It is predicted the average three bedroom, semi-detached home will cost €200 to €250 in property tax, under provisional plans being drawn up by the Government.
The property tax is expected to range from €100 to €600.
Further details will be revealed in the middle of next year.
The Government is going to set up an expert group, drawn from a range of departments, in the new year to consider the approach to the full property tax and report back by mid 2012.
Pretty much every household will be hit by the new combined property and water tax.
The collection model is based on the second-home tax, which was introduced in recent years.
Essentially, it's a self-declaration system where homeowners have to voluntarily come forward to pay the €100 charge.
Where homeowners refuse to pay, they face late payment penalties, building up to a maximum fine of €2,500.
The Government is going to use information from a wide variety of agencies to check on ownership and occupancy of houses.
The flare up of national political resistance at the moment is building upon a series of locally organised campaigns.
Largely speaking, members of the public tend to comply with the law, so the silent majority will end paying the €100 tax -- albeit reluctantly.
But widespread refusal to pay the tax will result in resentment from those who did pay. The prospect of large numbers of homeowners being dragged through the courts is hardly sustainable.
Big Phil is using Big Brother tactics to spot those who are trying to evade his tax, but he'll be relying upon ordinary people to just pay up for the property tax to be a success.