Cabinet considers property tax cap

A cap on property tax is being considered by the Cabinet in a bid to head off a surge in charges, Tánaiste Joan Burton has revealed.

The Labour leader said action was needed as significant property price rises in urban areas could trigger steep hikes in the tax.

Ms Burton said the Government was awaiting the results of a report on the issue before acting.

The Tánaiste also indicated banks may be stripped of their veto regarding insolvency mortgage deals.

The measure is among a raft of proposals being looked at ahead of the unveiling later this month of new measures to try and head off an threatened wave of repossessions.

Ms Burton echoed concern that if the property tax system was left as it was, the automatic increase planned for next year could see some charges soaring.

“What has happened with the rising property prices in Dublin, I think was are all aware, for some people the valuations could rise very steeply,” the Tánaiste said.

Finance Minister Michael Noonan has asked Dr Don Thornhill, the ex-civil servant who created the property charge in 2011, to look at how the system can be overhauled.

Government TDs in Dublin, Cork and other urban areas fear an upswing in tax levies, in line with property prices, will be extremely damaging to their re-election chances as the country heads to a Dáil poll.

Coalition deputies are also concerned about the rising number of repossession cases going through the courts and the minimal impact of the insolvency service of brokering deals between lenders and people in mortgage arrears.

Asked if she wanted to see the banks stripped of their effective veto on mortgage deals, Ms Burton said the matter was being discussed by the Cabinet.

“I have had a series of discussions on this with the Taoiseach and other members of the economic management council, there is a number o different issues which have to be addressed.

This proposal to bring the period of bankruptcy or insolvency down from three years to one year.

“Where banks go into discussions through the various mechanisms and then pull out at the last minute, that’s wrong and that’s extremely wrong that that should be happening and a mechanism has to be found to address that.

“There are two proposals on the table, one is use the insolvency service of Ireland and the other is to use. either with the insolvency service, or on their own, the credit review office and that still has to be decided upon.

“The main aim of the Government remains to keep people in their family home, and secondly, to get workable solutions where people can make a contribution to paying off their debt,” the Tánaiste said.

The Government is believed to be considering setting up an appeals mechanism for mortgage holders as a way of breaking the banks veto on resolution settlements.

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