Taxing times…

We’ve yet to hear what the report on the upcoming property tax will deliver in terms of proposals – there’s talk that it will be house value rather than property site value. It’s also said in the SBP that it will be ‘levied at 0.2 per cent of the property value each year’. Note that this is not, at least on the face of it, a progressive tax. And there’s no clear indications of what exemptions there will be.

It is understood that it recommends that the tax be levied widely, with as few exemptions as possible, though the ability to defer the tax will be recommended for taxpayers with low incomes, but high-value properties, typically pensioners, whose families may be able to settle the liability from their estate.

I can’t help but think that this is going to cause serious problems for the government in implementing it. Even if the CAHWT is pushed aside one of the key elements, lack of progressivity and fairness in application, is going to generate protest. Though in fairness all this exists in a vacuum, even if one accepts the SBP appears to have its ear close to the ground.

And the SBP is already leaking that the recommendation on how it will be collected is as follows:

A central focus of the report is understood to be the collection of the tax – follow-ing the fiasco of the house- hold property charge – which only around 55 per cent of those due to pay have actually done.
The committee is understood to recommend that, while the cash would be allocated to local authorities, it would actually be collected by the Revenue Commissioners.
The Revenue is seen to have the expertise and the resources to do this, and PAYE taxpayers may see the tax deducted from their paypackets, depending on how the Revenue decides to process the collections.

This is very telling, is it not? The property tax has been flagged as a key component to funding local government, and yet it is clear that collection mechanisms do not exist with sufficient depth and purchase on the electorate to ensure that payment will be made, hence the recourse to Revenue. Of course it also shows up how cosmetic all this is. A local tax collected through a national mechanism? What scope there for geographic differentiation along the lines of the community charge in the UK? Next to none one supposes.

Though perhaps win win from the government’s point of view, with no necessity to introduce a new means of tax collection while using one arm of government which is highly developed and all-pervasive.

Of course if the property tax is crucial to establishing the link with the local then all this is laughable.

And why all the messing around, the lip service of going through the middle man of local government/authorities, the supposed link with local government, when the actuality is so different.

Why not just tax incomes in a progressive way using the… er… income tax system for the job – and extend the scope of Revenue to incorporate a real tax on wealth?

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