Saturday 19 January 2019

Elderly deserve aid, but young now face huge property bills


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Kevin Doyle

Kevin Doyle

One the surface very few people would begrudge allowing pensioners off on their property tax.

Most of us expect to be old someday and reap the benefits of free travel, the pension and - if the Independent Alliance gets its way - avoid Local Property Tax (LPT).

Having seen Taoiseach Leo Varadkar effectively kill off its so-called 'granny grant' for grandparents who take on childcare duties, Shane Ross's troops have a new plan.

The LPT is under review because the Government knows that unless the system is remodelled, all homeowners will face massive hikes to their bills in 2020.

That might seem like a while away, but such is the sensitivity of anything to do with the property market in this country that the Government is preparing well in advance.

Mr Varadkar and Finance Minister Paschal Donohoe fear that unless they are seen to be taking action, a narrative that massive hikes are on the way will take hold.

In theory we are due a big increase. Homes are still being valued at 2013 rates for the purpose of calculating the LPT. But double-digit price increases have taken hold.

Property taxes are a feature of most systems and Ireland's current charges are relatively low by international standards. Yet it brings in almost €500m for the Exchequer. The majority of this is kept locally for maintaining infrastructure and amenities.

What the Independent Alliance is proposing is to exempt pensioners on a fixed income from the charge altogether.

In theory that sounds lovely - but the submission revealed by the Irish Independent today is likely to spark debate.

The majority of older people own their homes outright, having worked for decades to pay off the debts. It is likely the house cost a fraction of what it is worth today.

Meanwhile, young first-time buyers are battling to pull together a deposit in order to secure a heavy mortgage. And as soon as they receive the keys, one of the first bills through the door will be the LPT. In fact, it's likely the first invoice will go to their solicitor even before the deal is over the line.

Fine Gael is trying to keep rates relatively stable for everybody while at the same time divesting responsibility for localised rates to councillors. Some councils will see this as an opportunity to raise more much-needed revenue, but inevitably others will engage in a race to the bottom for electoral popularity.

The UK has learned this the hard way. The 'Guardian' recently reported how a seven-bedroom home of "ambassadorial proportions" worth €17m in Westminster was billed for £1,376. Meanwhile, a pensioner in Nottingham living in a small bungalow worth around £150,000 pays £1,645.

Such anomalies are most likely to develop in Dublin but could also affect counties like Cork, Galway, Waterford and Kilkenny. Somebody will end up feeling cheated.

Mr Varadkar says property tax "makes sense" as a progressive measure - but it's not as simple as might first appear.

Irish Independent

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