Ibec: Help businesses by doubling property tax

Employers’ group Ibec has urged the Government to effectively double the controversial new property tax on householders to ease the burden on business.

In a submission to an inter-departmental group established to advise the Government on the design of the new tax, Ibec pressed the Government to introduce the tax at a rate which would see the average household charged €800 per annum — almost twice the level proposed by Finance Minister Michael Noonan.

Ibec claims the new tax, which comes into effect in July, “provides the opportunity to lessen the burden on business”.

Ibec admitted its average recommended property tax rate of €800 would be even higher, if exemptions were allowed.

Under details announced by Mr Noonan last month, a property with a market value of between €200,000 and €250,000 will be subject to annual property tax of €405.

Most of the 18 recommendations put forward in the report by the inter-departmental Thornhill group were accepted by the Government.

Ibec said average rates of €800 were necessary in order to preserve business viability and protect jobs.

It claimed there was an urgent need to rebalance the share of local authority revenue contributed by business. It argued that local property taxes at that level could reduce annual commercial rates paid by business by €400m to €1bn.

It recommended the Government go for an ambitious property tax which would raise €1.8bn by 2015 as opposed to the €685m to be raised in local taxes, according to the Government’s own figures.

It also emerged that the group representing senior managers in local authorities were opposed to the introduction of any waiver scheme for the new tax.

The County and City Managers’ Association said there was no case for introducing a waiver system as genuine cases of a person’s inability to pay the tax could be remedied by a deferred payment system with interest which could be discharged through the eventual sale or transfer of the property.

However, the association advised against a property tax based on the market value of property. It proposed that the tax should be levied on the estimated rebuilding cost of a home.

The Thornhill group rejected submissions by a organisations including the Construction Industry Federation, the Irish Property Owners Association, the Society of Chartered Surveyors Ireland, and estate agency Douglas Newman Good for the tax to be imposed on occupiers rather than property owners.

The Construction Industry Federation criticised the composition of the Thornhill group for consisting entirely of representatives of Government departments.

Douglas Newman Good expressed concern that imposing the tax on property owners would push many of them into bankruptcy, with the likelihood of many former rental properties being put up for sale, leading to further downward pressure on property prices.