Saturday 18 January 2020

Now the door opens on a real property tax

WHEN the Fine Gael-Labour Coalition came to power a year ago the country was deep in an economic bog. Among the Government's most pressing needs was reform of taxation -- reform which would increase revenue and would also be fair.

The country is still in the bog. The need for reform is undeniable.

But one of the methods employed, the €100 household charge which must be paid by March 31, does not pass the test of fairness. It will apply at the same rate to every household in the land regardless of means.

Its only justification is as a kind of "dry run" for the next step, a residential property tax based on site value. Most economists will approve of this move. Its opponents, however, see it as an opportunity presented to them by the Government.

They have mounted a campaign urging householders not to register for the tax. Immune as they are to logical argument, they appear to see no absurdity in people who call themselves socialists opposing a tax on property. A much more serious issue is the clumsiness with which the Government has handled the question.

At no time has it explained the point of introducing the household charge at this juncture. Instead of making it easy to register, it has made it remarkably inconvenient. It has taken risks, if only minor risks, for an extraordinarily small potential gain, €160m a year. And it has advanced no argument based on principles of taxation.

Clearly the reason is that it has, as yet, no rational argument to back its actions.

The need to raise money is undeniable, but we could now face endless and pointless disputes about every aspect of property tax, above all the revenue it raises.

There is speculation that it will amount to €200 -- €300 per house and add upwards of €400m to the Government's income.

Such figures must derive from the use of fingers and backs of envelopes.

In the real world, we could find ourselves paying much more. Householders in many countries pay a great deal more.

In terms of present problems, the Government must stand firm and insist on collecting the due revenue. In the longer perspective, it needs to take a deep look at our unsatisfactory taxation system.

It cannot retrieve the losses, the destruction of wealth, suffered in the economic crash. It will continue to have policies, often unpalatable, forced upon it from outside.

But nothing stops it from devising a system of taxation that is both just and efficient.

Irish Independent

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