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.

@ 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

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.

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

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.

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.

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.

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.

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?

Hey what about abolishing the CGT exemption on homes!

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.

- 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.

This is alarming, if the conclusions are true. Is this what NaMa and the ECB funding are really all about? A new housing bubble? Taxes may be retained on transfers if so, no wonder there is no time scale for implementation of a property tax!

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?

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.

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.

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.

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.

No need to to re-invent hot water.

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 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