Homeowners facing new €80 a month tax

Clodagh Sheehy

Homeowners face a nightmare €80 a month in property tax payments under a proposal by the country's top economic think tank.

The fee would be for houses costing €240,000. Anyone with a higher value house would have to pay more.

More than half of the tax take would be raised in the greater Dublin area, where property values are higher.

The only exemptions likely are for people who bought their house in recent years and paid a lot of stamp duty and those on social welfare benefits.

The plan is for the tax to bring in close to €1bn a year, mostly from middle-income earners. It is understood that a property tax is almost certain to be a part of the forthcoming Budget as the Government tries to meet its €6bn target of cuts and savings.

The ESRI is recommending the charge on homes which would be based on a percentage of the value of owner-occupied houses.

The tax is likely to be about 0.4pc of the value of the house which would mean an annual bill of €960 on a home worth €240,000.

They suggest that homes be assessed by valuers working for the State to bring the scheme in quickly. If necessary, a private firm could be contracted to carry out the valuations.

The location of the house, number of rooms, area and whether the house is detached, semi-detached or terraced, would be taken into account in estimating the value.

Houses in urban areas would be given a higher value and neighbourhood factors such as whether the house is in a crime-ridden or safe area, would also be taken into account.

The ESRI report recommends that a tax based on the valuation of homes is the most effective.

Dr Tim Callaghan of the ESRI admits the study shows that middle-income earners would be hardest hit but says "there is no painless way of getting extra income in".

A property tax, he says, is the sort of revenue-raising measure that would have the least impact on the labour market.

Acknowledging that there is a need to protect those who could not pay, the ESRI suggests reliefs for the low-paid and those on social welfare.