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Now Dubliners face up to €1,000 in property tax

This equates to €800 to set up and install the water meters.

And this standing charge is on top of yearly bills, which have yet to be decided. An independent regulator will set these prices. Minister for State for Natural Resources Fergus O'Dowd said that the money raising initiatives were desperately needed.


"Everybody understands where the country is. The alternative to what we are doing is utter and absolute chaos," he said.

The ESRI has recommended that the property tax -- estimated between €400 and €1,000 a year -- should be based on the capital value of homes rather than the value of the site.

While working families would be expected to stump up hundreds of euro a year for their property, those on social welfare would escape the charge.

"We accept as a government that it is unfair. We accept that the fairness of a property tax that is based on the ability to pay is a much fairer system and that's what we want to do," Mr O'Dowd said.

However, any attempt to levy the tax on homeowners in negative equity was today branded as "preposterous".

Most people would pay in the region of €2.50 per annum for every €1,000 of house value, according to the main scenario outlined by the ESRI.

Properties worth the national average of €160,000 would be taxed at €400 a year.

A family living in a home worth €400,000 would have to pay €1,000.

Independent TD Stephen Donnelly believes the Government has to "proceed very, very carefully" with the plans.

"I am in favour of local taxes as long as they are in a package of very serious, radical local government reform and as long as they are affordable," the Wicklow & East Carlow deputy said.

"At €2.50 per €1,000, someone living in a €300,000 house would now face an additional charge of €750.

"It's not tax deductable so if you're paying tax at the marginal rate you're going to have to earn nearly €2,000 in your gross wage just to pay €750," Mr Donnelly said.

Minister for the Environment Phil Hogan confirmed the National Pension Reserve Fund would supply a loan of €450m to establish Irish Water and supply an estimated one million homes with water meters.

Irish Water will be a subsidiary of Bord Gais and will be responsible for delivering drinking water and treating wastewater from homes.


Water currently costs the state €1.2bn, a portion of this is paid for by corporate entities. Now households will be asked to pay their share.

Meanwhile it was revealed that chief executive of Bord Gais John Mullins is due to step down in December.

A representative for Bord Gais told the Herald: "The chief executive's contract is due to expire at the end of the year. The issue of the extension of his contract, against the background of the establishment of Irish Water, is a matter that has yet to be concluded."