Wanted: Right rate for property tax

Wanted: Right rate for property tax

It wouldn’t be a surprise if Taoiseach Leo Varadkar spent some of his Christmas downtime thinking — and worrying — about 2019.

Quite apart from the impact of the exit from the European Union of Britain, one of its largest economies — and the trade and financial implications for Ireland — there is: the wobbly arrangement with Fianna Fáil; the possibility of a general election caused by the untimely deaths of Fine Gael TDs; and the certainty that housing, homelessness, cash-starved essential public services, incompetent government bureaucracies, and taxation will continue to be high on the list of issues worrying voters. 

Who’d be a Taoiseach? 

Wanted: Right rate for property tax

Well, it’s a role for which there’s no shortage of applicants, despite Shakespeare’s warning of crowns on uneasy heads.

A 2019 challenge that has trouble written all over it comes in the shape of the local property tax (LPT). 

Currently based on 2013 valuations, it’s scheduled for updating in the latter months of next year, so property-owners in parts of the country that have had dramatic increases in house prices will have to pay more in LPTs in 2020. Or will they?

Fear not, says the Taoiseach, in an attempt to appease the affluent. 

“I know people feel that because house prices have gone up a lot in the last four or five years, that it means their property tax will go up by that amount. We are going to make sure that doesn’t happen.”

Quite how that circle can be squared — updating valuations, while pegging the taxes paid at current levels — remains to be seen, but Mr Varadkar has chosen his words carefully. 

He’s promised that there will be no sudden, significant increases, which means there will undoubtedly be increases, but they will be gradual, moderate, and well within the means of Fine Gael voters, who have large, expensive houses.

One way to curb increases would be to abolish the LPT exemption for properties bought in 2013, 2014, 2015, which would be fair, since these owners need, and use, the same local public services paid for by their neighbours. 

Perhaps we should call time on their lucky break?

But is the LPT a local tax? Collected nationally, with a fifth of the income going to local authorities to help pay for essential services in less well-off regions, it’s a version of the revenue-sharing system now well-established in the US and Britain. 

The Taoiseach suggests this might be changed, with the wealthy regions keeping every cent of every euro of their tax revenue. 

That could be offered as a consolation to owners in better-off areas, who might have to pay just a little more as a result of next year’s revaluation. 

Their local councils would have more cash for emergency services, libraries, street lighting and cleaning, parks, and the rest. 

But spare a thought for poorer parts of the country. 

Mr Varadkar has spared such a thought. 

“There would still need to be an equalisation fund to make sure those less-well-off counties, particularly down the western seaboard, don’t lose out.” 

So, how would the money for an equalisation fund be conjured up? 

It’s likely that the Taoiseach doesn’t know. It’s a taxing work in progress.

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