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February 7, 2011

Irish election and property taxes

PLRG's Chairman, Dave Wetzel, has been advising certain parties across the Irish Sea about property tax. Currently there is no form of 'rating' (local property tax) in Eire, although in Northern Ireland the old rating system was never abolished when Britain had Poll Tax imposed in 1989. Some would say that lack of any property tax helped fuel the house price bubble, whose bursting was a major cause of Eire's current economic woes.

The outgoing Fianna Fail / Green coalition government had plans to introduce a Site Value Tax. Those plans may still be implemented, if the piece in yesterday's [Irish] Sunday Business Post online is right....

Fine Gael's plan to replace a property tax by introducing capital gains tax on primary residences has the political merit of not imposing a new charge on people immediately.

It is also a less clumsy and probably fairer way of raising revenues from property. But, like stamp duty, it depends on transactions. As such, it is highly unpredictable in terms of the revenue it might raise, especially in a depressed housing market, such as at present. Labour suggests a ''site value tax'' would be introduced in 2014, but no property tax immediately.

The difference between an annual tax, such as Greens & Labour in Eire propose, and a property tax that only gets collected when a property is sold, is that the former encourages construction and also transactions in property - and cannot be avoided by simply not selling or developing a site - whereas if there is no transaction then there's no tax!

Why is that so difficult for some people to understand?!

Posted by Tony Vickers at February 7, 2011 1:33 PM | TrackBack

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