Friday 19 July 2019

John Downing: 'Nightmare scenario of tax hikes at election time strikes fear into the hearts of TDs'


Leo Varadkar (Tom Honan/PA)
Leo Varadkar (Tom Honan/PA)
John Downing

John Downing

The TDs are back at Leinster House tomorrow and Fine Gael deputies in particular fear something very nasty lurking in the shadows. It could well be that fatal combination of elections and tax hikes.

There is a growing view that carbon tax increases - to modify behaviour, of course - are now inevitable before this Government faces the voters next year seeking a stronger mandate to govern. The Taoiseach has said he would like to see a cross-party approach on the issue but in the run-in to an election he should not bet the farm on that.

Meanwhile, in the more prosperous suburbs of Dublin and elsewhere, the risk of property tax hikes is looking perilous. The local property tax hit us all in 2013 but was mercifully based on financial crisis-era house valuations.

In the ensuing five years property prices have soared and those downtime valuations are set to expire later this year. Let's randomly look at Dublin 14 where back in 2013 the average valuation was €336,000, giving an average local property tax of €585 per year. By 2018 that average Dublin 14 value had jumped to €632,000. If the valuation was updated accordingly, and the current system applied, that would mean an average local property tax of €956 per year.

Big picture, you can think of that as a very painful hike. Not the kind of thing you want hanging about as you go out looking for votes.

Now why pick on Dublin 14 as an example? Well, it's the postal address for the constituency offices of Culture Minister Josepha Madigan.

Suggestion: Culture Minister Josepha Madigan tweeted that south Dublin should face a different property tax regime due to high house prices. Photo: Fran Veale
Suggestion: Culture Minister Josepha Madigan tweeted that south Dublin should face a different property tax regime due to high house prices. Photo: Fran Veale

And the numbers are a very pithy example of what we are talking about. It is no great surprise to find that Ms Madigan, a first-time TD since February 2016, just does not want anything like that to happen.

Ms Madigan took to Twitter over the weekend to advocate on behalf of her south county Dublin constituents. This was after the Irish Independent reported the soaring property prices and their potential to drive soaring local property taxes. "I would like to see a lower rate in areas with the highest house prices. Residents of south Dublin, for example, should be entitled to reliefs as they could be most affected," Ms Madigan wrote.

Unsurprisingly, she was instantly castigated for seeking special treatment for people living in affluent suburbs. No surprise that People Before Profit TD Richard Boyd Barrett called on the minister to campaign for an end to the tax.

But mortgage campaigner David Hall said she was showing bias towards better-off people and argued there can hardly be a property tax not related to market valuations.

The real rub appeared to come from Fianna Fáil housing spokesman Darragh O'Brien. He said Fianna Fáil doesn't want any increases in property tax and he believed the rate needs to decrease nationally. Mr O'Brien accused Ms Madigan of making a "ridiculous suggestion" in advocating a different method of property tax calculation for south Dublin.

But the Fianna Fáil deputy did urge the Government to publish its plans, taking it beyond general but vague assurances that property tax increases will be "modest". Until we see the detail of the new regime, these scare stories will flourish.

Josepha Madigan's stance is unlikely to be the only example of prominent Government TDs putting their heads above the parapet on this one, although things are particularly tight in her three-seat constituency of Dublin Rathdown.

We will hear more of this in the coming weeks as TDs prepare for the general election.

Irish Independent

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