The Government has vowed to introduce the long-mooted property tax in the December budget.
The €100 household charge was introduced as a precursor to the property tax because of the time required to establish the latter.
There were suggestions that the necessary systems would not be in place to allow the property tax be introduced in December.
However, in the latest memorandum of understanding between the Government and the troika on the bailout, a commitment is given to introducing the tax in the budget.
Draft legislation detailing the tax will be published with the budget, including how it will be assessed and collected. It will be “value-based”, meaning the more valuable a property, the more the owner will pay.
The memo says the budget will comprise of “at least €3.5bn” in adjustments, €1.25bn of which will come from additional taxes and €2.25bn from cuts.
Tax changes, or “revenue measures”, will include:
nA broadening of the income tax base. This will not mean increases to income tax rates, but could see a number of reliefs reduced or abolished;
nThe property tax;
nA “restructuring” of motor tax;
nIncreasing excise duty and other indirect taxes.
The cutbacks, or “expenditure reductions”, have already been flagged and will include cuts to the social protection and health budgets, as well as continuing cuts in the public service pay and pensions bill.
The memo maintains the pressure on the Government to tackle the over-run in the health budget and lower the social welfare bill.
Health Minister James Reilly has to specify by the end of September “quantified measures to eliminate the [health sector] spending over-run by year end”.
Social Protection Minister Joan Burton will have to update the troika by the end of September on the “activation system” — measures to get people off welfare and back to work.
Taoiseach Enda Kenny has indicated his belief that this budget will be the most challenging of the Government’s five-year term.
The Government remains confident it is making progress and can avoid further bailouts — so long as it gets a deal to cut the cost of the existing bailout.
In June, EU leaders agreed to assess the sustainability of Ireland’s debt. The Government is hopeful a deal can be reached to reduce the burden of both the promissory note system funding the Anglo bailout and the restructuring of Permanent TSB.
“Meeting these objectives would strengthen confidence and give impetus to Ireland’s recovery,” the Government said.
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