I’d do anything for the market (but I won’t do that)...

Interesting, is it not, the immediate negative reaction to the IMF’s latest slew of proposals. Well, actually the negative reaction from Fine Gael to one of those proposals, that being the introduction of a property tax which would… well, here’s the Irish Times take on it:

The IMF said options to broaden the PRSI base could be examined and that the planned introduction of a value-based property tax next year will provide “a progressive and stable” source of revenue.

“A suitably high level for this tax – where staff favoured around the 0.5 per cent mark – would help maximise these benefits,” the report adds. “There is also scope to expand the well-designed carbon tax to all fuel types, and to redesign vehicle taxes in a way that can provide significantly higher revenues, while fully preserving incentives for environmental conservation.”

To which came this response:

Responding, Minister for Finance Michael Noonan said this proposal was too high and seeking to gain €1 billion from 1.6 million homes would impose an unfair burden on households.

Speaking in Westport, where the Fine Gael party is having its annual think-in, Mr Noonan said the property tax to be introduced next July would be lower than that proposed by the IMF but he did not specify the rate.

Cliff Taylor in the Business Post put it this way:

IMF staff believe it should be set at 0.5 per cent of house value, or about twice what the government is believed to have planned. At €500 euro per annum for every €100,000 of house value this would be political dynamite.

It would indeed. But reflect if you will on the fact that the orthodoxy resiles at the idea of what Taylor calls a ‘significant’ property tax (of course it’s no such thing only being a tax on housing), but no such strenuous declarations that there are problems with other parts of the IMF’s reported proposals:

It said improved targeting of spending on child benefit, the medical card and college fees “could generate significant immediate savings and contain demographic related spending pressures over the longer term, while effectively protecting the poor”.

Meanwhile that growthy thing that we’re all depending upon? Curiously one reads that:

The IMF said it expected GDP to rise by 1.4 per cent next year, down from the 1.9 per cent predicted in June. It also slightly lowered its forecast for this year from 0.5 per cent to 0.4 per cent.

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