Commission on Taxation: Property taxes

When I studied public finance in the late 1980s, stamp duties were presented as historical oddities: Simple to collect but so distortionary that they had long been abolished in the civilised world.

The Commission on Taxation recommends that stamp duties be abolished and replaced by a property tax. Impeccable.

In fact, the CoT recommends that the stamp duty on non-owner-occupied residential property be maintained. This creates unnecessary friction between the rental market and own homes.

The CoT also recommends that rezoned land be subject to capital gains tax. This is smart, treating land like any other capital, thus improving capital allocation. It would further depress the land market, though.

Returning to the property tax, the CoT recommends that house values be self-assessed. This creates a problem with asymmetry of information. In fact, the CoT immediately adds that the Revenue Commissioners would not have a clue about the value of houses. This part of the proposal would create the new national sport of property tax dodging.

It seems, though, that the political leadership is not too keen on the property tax. I would suggest that it’d be introduced in 2011 and that 2010 is used to build up a database for “objective” valuation of residential property. In other countries, the “taxable” value of a house is typically far below the market value (so that no one can challenge the tax person) while the tax rate is fairly high (so that revenue is not affected). Building up the data can be done in a year, and would actually employ a few recent graduates.

66 replies on “Commission on Taxation: Property taxes”

@Richard Tol
Not only do the Revenue not have a clue about the value of houses, house owners don’t know very much either, thanks to data protection laws and the supression of so much information on transaction values.

Maybe a bit of transparency in pricing might be a first step.

the new idea for property tax is actually ludicrous, they want to stamp AND ongoing tax landlords, this will disincentivise the provision of well maintained rental property and recreate the types of shoddy accommodation that used to be so commonplace.

it is also off the mark on a concept side, namely: everybody would probably agree to a property tax if it resulted in less income tax, this would also allow the less well off (who typically are not property buyers) to have a better standard of living and ensure that people don’t land-bank, ransom strip, speculate without time cost or do other damaging activities. And secondly, if it was used to provide funding for the services you receive such as basic water supply, infrastructure, schools, hospitals, fire service etc.

doing it based on valuations is a sham as well, there is a live working example of the difference this makes to capital investment and expenditure – australia: the difference between melbourne (which used to be the bigger city) and sydney is that in sydney tax was based on site values so as not to discourage the building of factories or any capital expenditures.

they said site values hold merit but there are some obstacles – namely the short-comings of their own making – we don’t have a property market that anybody has figures on or understands, half of the folio maps are in a system that was designed in the 1700’s.

instead they just opted for a tax, it is rent taking, it isn’t about making the system better, the only reason they are choosing this now is that the transaction basis of stamp doesn’t exist in the current market so they are trying to make the transition selling all of the beneficial elements of property tax less any of the actual upside to the person who pays.

rant over


Simply putting the assessed (‘taxable’) value of the house well below the market value does not eliminate disputes and challenges. People will dispute an assessment when it is out of line with assessments of other houses of similar quality and location. I believe this is typically how assessments are challenged in the U.S.

Valuation should be based on a simple equation, with a few indisputable explanatory variables: age, size, location.

(This would actually create an incentive to maintain and upgrade houses.)

I know little about Irish law, but I cannot see how one could challenge that. Similar property would be valued similarly. They only challenge you can mount is about a missing explanatory variable that would make your house particularly cheap.

What about all the people who have bought houses and apartments and have to pay Management Charges because the Local Government negated their obligations by letting developers keep control of the estates they build under the guise of a Management Company so that they could continue to control and make money from the homes they sold at over inflated prices and helped dig the big hole we now find ourselves in as a nation.
People are having difficulty in finding the monies to pay their bills as it is, if the government implement any of the CoT report the courts will be full of families and young people being sued by Management Companies (Developers) for charges that can no longer afford. How ironic that the developers that sold homes that are now not worth what was paid for them and will have been bailed out by the government will crush the last life out of the people that believed them, the media and of course the government. As the song says, it a wonderful world!

@richard tol – totally agree – but why get into more variables? you can set site value (determined by sqm) for large tracts of land, then you charge according to folio size – the reason they aren’t opting for this is that they don’t actually have the folio information in a modern dataset.

increasing based on ‘value of property’ complicates the process which will lead to loss of income in the collection process/investigations etc and it discourages capital investment which is a good thing.

why build a factory if you will just get taxed for doing so?


I just cant see a property tax being brought in at the current time.

Changes to stamp duty may occur but property tax is a step too far for this government.

But its an indication of where we’ll be in 5 years and as you say it makes it even less appealing for investors to get involved in property.

Bet they wont use long term economic value for this !!!

In Holland we pay a local property tax called the WOZ. They estimate the value of your house by comparing it to three other properties in the area. If you don’t agree with the valuation you can appeal. Here there is full transparency on sale prices so it would normally be quite clear if they were overvaluing your house (of course nobody contests undervaluation).
Without access to valuations of comprabale houses self-assessment is not really viable I would imagine.

Irish Auctioneers & Valuers Institute have called for national house price register – whilst (some) transactions are taking place, the lack of transparancy in the market makes the little information available of less use – and the assessment of valuations for property taxes is just one area.

@ edward carey

I know karl deeter has been pushing for greater transperency on house prices and maybe this property tax proposal may be a way of developing this long overdue requirement.

A national house price register would improve confidence in the market but also analysis of the market.

Its interesting isnt it…. the need to have a register to stop people fiddling property taxes but also the need to hide current property prices so NAMA can overpay banksters and developers…. The kelptocracy are becoming more brazen.

If theres going to be a property tax, let it be payable by all property owners. Yes Zoe, could/should be shut down if it cant pay up. NAMA should pay its share, banks who repossess houses should pay up, farmers should pay up, Coillte also…….One law and rule for all, no special cases.

@ Richard

We keep referring to value when we should be talking about price. They are not one and the same.

Let us indulge in a hypothetical scenarion. Assume self assesment was already in place for the past 3 or 4 years.

How much would you asses for today?

Who do you turn to for guidance as to the current market price of your property?

It is a total mess of an idea. Nobody in authority in this country seems capable of foresight. Nobody asks What if….

To avoid being challenged on our own self assesment, we would have to get a yearly valuation by an auctioneer. Nice little earner.

It is not an ideal solution, but I think a fairer method would be on a square meter basis to be decided at local authority level.

There could even be a national token minimum per sq. meter allied with a local authority top up.

Logic dictates that prices in Dublin are higher than they are in Leitrim for example. Any tax that proposes a coverall blanket would be totally unjust.

Safeguards can still be put in place for the financially disadvantaged.

In general, the bigger the house, the higher the market price. It would be rare to see a two bedroomed house selling for more than a three or four bed in the same area.

1) Having bought a very small family house in 2003 then sold in 2005 to buy a larger family home (for family additions), I would be more than happy to pay the suggested annual tax in the Report (back dated to 2003) in exchange for a full refund of the lump sum stamp duty I paid on both occasions. I am sure there are many like me in the same category. But of course, this is a dream only. [Please no – ‘didn’t you see the writing on the wall’ comments re the property market. I didn’t buy as an investment, but rather as a family home. Life is what it is though]

2) In terms of price transparency, it is remarkable that the Minister can find time to change data protection laws to penalise companies that use email/text to SPAM (a good idea which can hardly be enforced unless the server is in Ireland – 99% of cases it is not) but cannot move swiftly to rid the Data Protection Acts of legal uncertainty over using personal data, i.e. price a house sold for, in order to create a public register which is truly in the public interest. The register does not need to name the vendor and purchaser. Take a look at for UK property as an example.

My prediction is that this property tax will become as big a mess as the stamp duty regime became.

It will start with the necessary exemptions. How are pensions with low income, but accumulated housnig wealth going to afford this? They aren’t, so there is an exemption.

Similarly low income households with large mortages. They will be incurring a tax charge on gross wealth, with only a tiny (possibly negative now) net wealth. So exemptions there.

As the yield clearly drops, the rates will be bumped up. Of course they will need to make the effective rate progressive so some form of step is needed to produce that with a higher or non-zero rate to apply above a certain level.

And on it goes, until they have narrowed the base sufficiently and compensated with higher rates and a very “progressive” structure.

Net result, a highly inefficient and inequitable tax raised on a narrow base.


The WOZ is lower than the market value. Gives a warm and fuzzy feeling of outsmarting the tax person.

Indeed. This wheel was invented elsewhere and it works.

@Michael Harvey
We don’t disagree. Having a uniform tax (per square metre) per local authority may be too simple. There is a lot of diversity in Dublin, so I would cut it up more finely.

@Peter Oakes
It would be fair to exempt those who paid stamp duty from property tax until they are even.

However, if the stamp duty is 7%, the property tax 0.25%, and the discount rate 5%, then the payback time is well over infinity — that is, the value of the stamp duty is always higher than the net present value of the property tax.

So, a property tax would mean double taxation.

@ Richard

Agreed. It does seem a far simpler method though than assesing it on value. If the tax is localised, there is likeley to be less resistance.

You referred earlier to the U.S.

My understanding is that you can pay as little as $500 a year in Wyoming or $8000 a year in parts of Florida.

Floridians might not agree, but when you consider the disparity of wealth between those states, there is some logic behind it.

The French tax is based on square metreage, and works very well. No gaming possible, and a completely stable tax base.

It is disappointing that even, as an example, property tax is reckoned on valuation bands, so that an extra eur in valuation could cost 1,000 annually. How could the Commission dream of extending this anomaly to a new tax?

@Kevin O’Rourke

Kevin, I think you might be wrong on the French system.

My understanding of it is that it is based on the notional rental value of the property.

Know as the “valeur locative cadastrale”, it is reviewed every year and determines whether the taxes increase or not.

There are two local property taxes which you may be liable for.
taxe foncière and taxe d’habitation.

The rate is determined at regional, department and local levels.
Nationally collected the taxes are then distributed to the regions and to the local authorities. It funds things like rubbish collection, street cleaning, schools and other community facilities.

Taxe foncière is payable by the owner, taxe d’habitation is payable by the occupier.

To the best of my knowledge The Tax varies from region to region.

How much? I have no idea.

The government has made clear over the last few days that it does not want to spend the political capital necessary to institute a property tax at this time. This seems fair enough – there are so many political challenges facing the government over the next few months that perhaps this worthwhile change in property taxation can be deferred. However it seems clear (see comments by others above) that a property transaction price register is a useful first step. Such a property price register also has enormous benefits within the property market (including NAMA pricing clarity) and elsewhere. Could the government be encouraged to take this first step?

Announcing that you’re preparing the ground for a property tax has almost the same political impact as announcing a property tax.

No need to make this public. The Revenue Commissioners already know your wages and your savings, and they keep that confidential too.

Most of the necessary information is there in the land registry, the geodirectory, and the databases of real estate agents and mortgage lenders. I say this can be done in a year, because these data need to be worked up to the standards of taxation and decisions need to be made on the exact specification of the imputed value.

Leave the stamp duty rates as at present, but spread the payment over a number of years i.e – if stamp duty is 6% then 1% per year over 6years, possibly a little higher to compensate for the dcf foregone.
This way over a number of years the tax flow will gradually increase and a property register will be built up. If the property is sold prior to the end of the payment period – simply take the balance from the sale proceeds


In Ireland, under the current Data Protection law, the sale prices of properties sold through private treaty are personal and cannot be disclosed.

The law can of course be amended, as was the case in the UK.

Again, as in so many of the debates this very useful website has enabled, we do not want anything here that resembles best practise.

Everything is shrouded in secrecy. We never needed a data protection act anyway.

I have noticed over the last few months through this site that it is generally only people with a desire to see radical change in the way we are governed who post to the blogs.

We rarely get anyone posting to maintain the status quo.

Sorry Richard…I am getting away from the point of discussion


I totally disagree.

The stamp duty should never have been a percentage. I believe the DoF saw it as a convenient cash cow with the ever increasing price of property.

Far better to have a fixed set of monetary amounts. No incentive therefore for any future government to cheer on the next property bubble.

Property rates are probably the way to go in the long term. The devil is is getting the mechanism right

@Michael Harvey “Property rates are probably the way to go in the long term. The devil is is getting the mechanism right”.

Question is, are there any good, equitable models/methods out there we could filch and use ourselves (or does every property tax system in the world have flaws? In which case, why not do something else that doesn’t have flaws?)

Why should e.g. a single person living in a three bed house pay as much as the family of four in the same house next door door to him who are obviously ‘consuming’ more services than he/she is? Why should a low income pensioner in a large house pay more than aforementioned single person (who’s a stockbroker earning 560k p.a.) in his 3 bed semi?

Was Thatcher on to something when she suggested a poll tax was the fairest way forward? That’s a rhetorical question by the way, not my pov. So just the one tax then instead of a myriad of property, water, carbon, etc. and we all (every man, woman and child) pay our fair share towards whatever the government are telling us these various taxes are for (saving the planet, keeping their Mercs, etc.)?

I would have thought that at a time when we could actually be simplifying the tax system (and possibly making it harder to bend and twist), it’s a bit daft to be coming out with a report that seems to complicate it more. A tax on child benefit being the cake – let’s make it more complicated and higher cost to administer eh? Pay it out with the one hand (cost of administering that) and then set up a new system, processes and workforce to claw some of it back. Would you run a business this way?

I imagine that the desire to place a floor under prices for new residential properties and for development land, will be as influential as concern for public opinion in discouraging the speedy introduction of a property tax. The Government has a lot riding on the value of NAMA’s prospective property portfolio.


I was replying to Gillys point. Re specifically raising money from property.

I would not take issue with what you have said. I do not think there is a totally fair property tax system anywhere in the world.

If, as the government has indicated, the various taxes would be available as income to local authorities, then perhaps a simpler method of raising revenue would be to use the U.S. system. A National tax and a county tax.
Based on ability to pay.

Tax based on ability to pay – yep!. No further discussion, except to challenge all and sundry to make explicit their economic/financial cognitive Model-in-Use. Each of us has one.

I am presuming the current economic Model-in-Use is Permagrowth. So far no contributor to this blog (apart from myself) has volunteered that they have an alternative. Nor has anyone challenged me. Now, Permagrowth is failing (various reasons), and we are transitioning from one economic/financial paradigm toward another – Permadecline. This model mandates a regular declension in the value of some significant asset types (eg. property). Hence, putting your faith (yes, its religion again!) in incremental increases in property (productive farmland and clean water excepted) is likely to give you a nasty and disagreeable surprise.

Notice a creep in fuel prices lately? It may be that the Export-Land Model of liquid fossil fuel production and nett exports is making itself felt. If you do not know about the ELM and its consequence for road, rail and aviation transport fuels, please inform yourself. Sure a significant decline in the availability of transport fuels would not pose any sort of economic hardship for us?

Brian P

@Brian Woods

Notice a creep in fuel prices lately?

Well it is certainly not demand that has boosted the price.

Every indicator last year suggested productivity and demand was falling, yet the gamblers took the price to $174 a barrel.

Las Vegas investing!

Not to worry Michael. You are orientated in the correct direction – which is more than I can say for many others. Traders may indeed have ‘ramped up’ the price to $147 – they were fishing for suckers! Stay alert! And may the Force be with you!

The world production of liquid crude appears to have stalled – not 100% certain, but 95ish. The current economic mess is confusing the situation. I expect ( faith-based expectation) that some of the main authors of this blog will eventually realize the connect between liquid fuels and economic well being and will start to toll some alarm bells. As long as none of them say “no one saw this coming!”

Brian P

Has nobody heard of a land tax? I seem to remeember in the dim, distant past that economists derived the concept of rent by looking at land as a factor of production. The price of a property should be equal to the price of the undeveloped land on which it sits plus the cost of constructing the property and providing the facilities for utility services on the site. The taxable value is in the land. All the other elements have all other leviable taxes embedded in them (on a historic cost basis) or would have them embedded (on a replacement cost basis). Similar houses in different locations have different prices primarily because of variations in the price and value of land. If people decide to build or own large houses that should be for them to decide and not provide the basis for taxation.

It should not be beyond the wit of man to derive land valuation bands for taxation purposes that are derived from a land valuation exercise and, for developed land, with the results of this exercise related to the estimated value of the land derived by deducting the cost of replacing the property from the property price.

This would work wonders for the efficient use of land and would generate a far better economic and spatial outcome than any centrally directed spatial policy.

The excellent labour party commentary on NAMA points out that there is already a state Valuation Office.

No need to to re-invent hot water.

@M O’L

Many thanks. However, this office now deals only (and on an up-to-date basis) with industrial and commercial properties for LA rates. I’m not sure where it’s at on land and there have been no residential property rates since Jack Lynch (guided by Martin O’Donoghue) lost the plot in 1977. However, it’s a starting point.

@ Richard

I agree that Self-Assessment is a fundamentally flawed approach.

The issue about Annual Property Tax is an idealogical one – should governments tax “flows” (income) or “stock” (wealth). Personally, I believe they should do both. I advocated so in my last book (p.61) coincidentally at a rate of 0.25% (my publicist at G&M is a Ms Daly)

Regarding the Property dB, I have spent more than 2-years building such a database (now has 102,500 homes) in MS-Access. It is incredibly difficult to produce a Unique Primary Reference Key (e.g. like say PPS no.s) in the absence of a Zip/postal Code system. I have built a mapping table on addresses, using County codes (like car registrations) coupled with 3-char abbrev codes for town/area etc. You would be surprised to learn how many homes there are in say Cavan with Gaelic house names – the same names are used across multiple properties in the same or neighbouring towns – instead of street/address numbers. A prerequisite for such a national database is An Post + Ordnance Survey first coming up with a new postal code.

@Kevin O’R
The Italian system of local property taxation is similar to that described by Michael Harvey for France. The main local tax is the “Imposta Comunale sugli Immobili” (ICI). This is calculated in a complicated way on the “rendita catastrale” (roughly “rateable valuation”) of the property. However, the formula for calculating the tax is obscure and many home owners have to hire accountants for help with the forms. The fees of the accountants sometimes exceed the tax! Moreover, many comuni do not bother to send out demand notices, but fine for late payment.
Needless to say this mess gave rise to an outcry that led the Berlusconi government to abolish the ICI on principal residences in May 2008. Shades of Ireland in 1978?

The average UK home Band D Council Tax was set at £1,414 (€1,650) in April of this year.

Based on UK HPIs (Halifax/Nationwide) their average home value is 30% below the Irish average as measured by PTSB-ESRI, accounting for currency differentials. Plus their average earnings figure is lower too.

Furthermore, homeowners receive an allocation breakdown of their taxes i.e. Police, Fire Brigade, Street lighting/cleaning, Council costs etc.

@ Brendan

The Spanish property tax known as IBI (Impuesto sobre Bienes Inmuebles) is payable annualy and ranges from a couple of hundred euro to a few grand for a large detached home in a nice neighbourhood.

Local authorities set the rate at between 0.5% to 1.1% of the rateable value of a property, and it is payable by both residents & non residents.

There was a newstory earlier this year regarding an Irish lady who forgot to pay and found that when she flew to her holiday home, that it had been repossessed! At that time a spokesperson for the Spanish government stated that their records that the-Irish owned 100,000 properties in Spain. That is more than the estimate of 60,000 holiday homes in Ireland.

See Letters section of today’s Irish Times for the Data Protection Commissioner’s view on publication of house prices.

@Paul Hunt

The valuations office is also the arbritrator in disputes re current market value, between local authorities/housing associations and sitting tenents wishing to buy said property.

I have been quite suprised that there has not been an upsurge in tenents looking to purchase, given current market valuations.

On that same subject, and sidetracking the thread, Would local authorities be justified in refusing to sell at anything other than long term value?

… meant to add that I am not convinced that ‘district’ approach raised by the DPC would be useful/valid valuation for something as important as a tax base issue. One street, let alone, one district may contain several 3 bed brick semis with huge price variations between all. Also although good contribution by the DPC to the debate, I am not fully clear on which specific exemption to the processing of personal data the DPC forms his view under. Thus although he might not enforce a prosecution against the papers, it does not mean that a disgruntled seller could not potentially sue an estate agent over illegal processing of data. But perhaps I am thinkinking about this issue too much and ignoring that saying I get told everyday – ‘an Irish solution to an Irish problem’.

Self-assessment can work, provided there is an appropriate incentive to tell the truth (or, more accurately, not to cheat). The following approach was outlined in an economics blog a few months back and works like so…

– The government sends me a form, on which I should enter the value of my property.

– I send back the completed form, along with the appropriate amount of tax that I owe based on my assessment of the value of my property.

– If the tax appears to be fair, based on the location, square meterage etc., then the government sends me a receipt and waves me adieu until next year.

– However, if the tax seems extraordinarily low, the government has the option to purchase my property at the price I said it was worth.

It’s self-assessment, but provides a very real incentive not to cheat the system.

@Pat Donnelly “This is alarming, if the conclusions are true.”.

Mervyn Allister King, by his own admission, said he didn’t know whether QE would work or not when he kicked it off. That translates (to me) into not having a clue what you’re doing. Alice’s conclusion seems to tie in with that.

What makes us think the people setting up NAMA may be setting out to deliberately reinflate the property bubble is open to conjecture. However, I would err on that side and agree with you – given what we’ve seen and heard in Ireland over the past few weeks seems to be indicating that.

They may be going up a blind alley though. Does anyone really have an appetite to take on that sort of risk here any more and possibly get caught in a double-dip property slide (slight rise due to reinflation of bubble attempts followed by further fall)?

I find that hard to believe – especially with the spectre of a number of repossessed houses probably coming onto the market next year as the growing number of unemployed run out of road, combined with banks no longer being beholden to government once they’ve dumped what they can into NAMA – they will then (I predict) shed jobs, put up interest rates and start coming down hard on people who are struggling to make any repayments (it’s difficult to pay off a €1,500 a month mortgage on €208 welfare payment a week and the redundancy payment only lasts so long – on which point did the COT suggest removing the tax on redundancy payments? I doubt it.).

The nightmare scenario if you are a bank worker must be to be made redundant in the autumn, pay some tax on your redundancy payment, then have your mortgage repayments increased (as your house retreats further into negative equity) by your ex-employer; for them to then repossess it in a few months time. The final insult would be to receive a property tax and water rates bill the day the bailiffs are coming to throw you out…. and then still be saddled with the balance of the mortgage once the bank had sold your house at ‘market value’. One assumes the next step on from there would be a court order telling you to pay something towards that outstanding debt followed by jail (when you can’t pay it) for contempt of court. Isn’t Ireland just a wonderful place?

It’s a plausible scenario. Don’t you just love the way when you’re working for a bank they try to portray working there as all being one big happy, caring family?

I must go back on holiday again. I seem to be turning into a cynic.

Yes, the bank workers are going to suffer and badly. Have they got their pension funds at arms length from the slimy creatures at the top? (Sorry for offending inocent bankersand I kow some of you do have integrity, but the mob in charge now! really!)
Thankfully, they will not suffer as did the GM employees. That left Ford, (god bless him!) dealing with unfair competition. How sad. What a mess is government interference.

Andy McG
Stamp duty returns to the Revenue disclose exact declared values for every sale. And they will automatically cross ref by computer, sometime in the next century! It is easy to catch you when you die and it is valued for CAT or when you sell!

Hey what about abolishing the CGT exemption on homes!

Brian Woods Says:

Yes, permagrowth has taken a knock, but bankers will cause inflation and shadow bankers will cause even more. That is what they do and atis what ibehind NaMa. I agree that too many have failed to anticipate a very significant dent in their model, despite clear warnings!

How stupid are they? Did they fail to measure the possible damage to house and pensiion fund? Were they too busy counting on further expansion? Personality types differ. Some are to suffer although without sin. What a mess!

Model failure on this scale causes suicide and despair among the survivors. If it crosses your mind, dear reader, please do not leave us! We want to talk to you and share the best life has to offer! Please know that this too shall pass. Seek help, you wil find friends.

This paradigm shift will only last for a while. The boosters are going to ensure that we get inflation. Japan is an extreme case. But our depression is onlystarting.
Now Brian how do you feel? Does that accord with what you see?

@Michael Harvey, you are right. The state translates square metres into a value. My understanding is that the price changes according to an index every year, and that there are then periodic adjustments. Communes, even the smallest, set their own rates, which is in my view great for local democracy.

However, the bottom line for the taxpayer is that they just declare their square metreage (plus things like numbers of toilets etc). There is no possibility to game the system — you are either compliant or you cheat. Which means that no-one in France hires accountants for this purpose, unlike in Italy! The real bottom line for me is thus that it is quite possible to design property tax systems that work fine and bring in real revenue, if that is what is desired.

Theory suggests that the property tax should be proportional to the long term economic value of the property. Pragmatism suggests that the property tax should be based on a simple equation with undisputable variables such as size and location.

The pragmatic solution will mean that some are overtaxed and others undertaxed.

A few postdocs could spend six months to evaluate the implications of alternative pragmatic solutions. After that, a wise politician should strike the appropriate balance between simple & robust versus efficient & fair.

As this is a billion euro tax, I think we can afford to hire a few people to sort this.

@Richard Tol

This is not repossession, this is a purchase – two very different things. However, your point is certainly well taken. A simple amendment could be to state that an instant buyout would primarily apply to investment properties rather than a primary residence.

The point is that self assessment can work if a mutual incentive is provided. The devil, as ever, is in the detail, but the principle is sound.

How can any property tax be fair. It can not guarantee any relationship between ability to pay and the rate charged.

For example, I have a large family and a large house, and I have spent money ensuring that it is environmentally friendly. It is also larger because it is adapted for a disabled person. For these reasons, I have a large mortgage. There is very little left to pay additional taxes.

I have no opportunity to to sell and change to a smaller house because the market is flat.

A property tax is effectively a retrospective tax on a transaction that occurred in the past, its just not a fair system.

Whey are all taxes, apart from VAT, not just rolled into a simple income tax. It would be fair and straight forward.

@ Pat. What can I say!! Rubberneck it – “Ye are all wrong, ’cause I say so!!” Or admit that its my (current) informed opinion – and I will surely keep the matter under close scrutiny. This latter seems better.

In respect of a propetry tax – its a ‘business-as-usual’ response. But sure what’s new. A Land Tax would be preferable. Tax the land according to actual use, a flat rate for your PPD (limit to .125 Ha), with an incrementing scale to discourage very large holdings. Payment is not based on income. However if you are not able to pay (low or no income) the amounts are carried forward (with the appropriate interest) and is paid out of your estate. This may not be either just or equitable, but the alternative will quickly run into a bog when property values go into gradual decline for an extended period. And think of all those ‘unfortunates’ who JUST have to have an exemption. Mind boggling!

Brian P

>Payment is not based on income. However if you are not able to pay (low >or no income) the amounts are carried forward (with the appropriate >interest) and is paid out of your estate.

But why should someone be taxed more because they choose to spend more on their home, and I mean spent more in the past. We already have taxation on capital gains, if and when something is sold, and you make a profit, then tax that by all means. Paying more for a nice home is not speculation.

@Ronlad: there is an important efficiency advantage to taxing property. Tax labour and you get less employment. Tax capital and you risk having less investment. Tax consumption and you have less consumption. Etc. But if you tax property you still have the property (although I recall in the spring some Minister suggesting on TV that all the apartment blocks might fly away into the night).

@ Roland – its a ‘business-as-usual’ type response, rather than a response which I would like to characterise as a ‘meaningful intellectual engagement with a complex issue’. Your damned if you advocate additional taxation. However, the state will enter soverign default if you do not raise additional revenue. Choose whichever you consider will be less uncomfortable to yourself!

@ RT – I might take issue with you on this matter. My home is where I find shelter and where I raised my family. A ‘flow of services’ ???? Mmmmm!

Look, our economic paradigm of Permagrowth is in the ICU. If you believe I am mistaken then we can debate this. I have no interest in changing anyone’s opinion – you can do this youself if you become convinced that the emerging economic data warrants such. I have formed the opinion that it we are in a transition phase toward a Perma-decline economy.

Brian P

Couple of points here –

1. In Ontario, property tax is per-municipality. This leads to cross-boundary frictions where urban municipalities have lower mill rates because of density of households, whereas suburban municipalities have lower house prices (or larger plots for the same capital cost) but higher mill rates. This is because fire/police/utilities/roads are more expensive to provide when wide lots mean half as many houses on the same length of street.

2. Ability to pay will be an issue right out the gate. Here there are both provincial tax rebates for seniors as well as deferral programs per-municipality.

3. Property taxes imposed on landlords will mean an increase in rents (in Ontario there’s a perception that only owners have to pay but that’s because the property tax, or proportion the landlord decides to reclaim per unit in a multi-residental, is not itemised when you rent)

4. Property taxes SHOULD measure the impact of the property on municipal services like roads, fire, storm drains. Therefore the value SHOULD be irrelevant. However, that will put the crosshairs on childless seniors who have lived in their home for countless decades and off young folk in high-rises or townhouses – the former vote, the latter don’t.

In theory I have no problem with a property tax if it is ring fenced for local authorities to spend on my local area (I have no expectation they can spend those monies efficently but that is another story). However if they introduce it now it just adds to deflation pressures. Even thinking about it makes me want to spend less money. I mean if the average cost in the UK is €1500 and assuming we have to earn €3000 to pay a tax of €1500 then to the average household on 38k that is the €3000 you spend on new couch or the downpayment on a car or your kids college fees. All of a sudden you have no disposable income.

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