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Floodgates open on household charges

BRACE yourself. While everyone has been getting excited about whether Ireland might need a second bailout from the EU/IMF, the reality of the existing one has been creeping up behind. Yesterday Environment Minister Phil Hogan -- whose normally uncontentious brief could be one of the most unpopular in this government -- confirmed that a new "household charge" will apply from next year.

This will apply in advance of a new property tax and the introduction of metered water charges. This should not come as a surprise -- even if the method being used does.

Both property taxes and water charges are in the agreement with the EU/IMF and there are deadlines for their implementation. Still, hearing the announcement of their imminent arrival comes as -- well, a dash of cold water.

The news will be wildly unpopular, for good reasons and bad. The first good reason to complain is that they will be another hit on household budgets, on top of rising interest rates, the return of inflation and, without doubt, further tax rises and spending cuts in the 2012 Budget.

The level of charge has yet to be decided, but the total could well be around €400 a year for those who do not qualify for reductions on grounds of low income. The second good reason to be cross is that this Government of openness and transparency is wrapping the proposal in a cloak of political obfuscation, to avoid accusations of another broken promise.

Part of the new "household charge" will be in lieu of a proper property tax, when the site valuations are prepared. The other part will be in lieu of water charges, when the new meters are installed. There are grave doubts as to whether the creaking adminsitrative systems can either do the valuations or install the meters on time.

The wrong reason for criticising the proposals is that they are a bad idea, or "double taxation." Ireland is almost alone in not taxing residential property or charging for water. That would be dubious policy even if the country was paying its way. But with a €10bn deficit this year before a cent is paid on the national debt or the banks, the country is anything but paying its way. There is no escaping the need to do so.

Irish Independent