Tuesday, 11 September 2012
Property tax to cost 0.25% of house value
THE PROPERTY tax will be pitched at 0.25 per cent of current house value, a Government source has predicted.
The source said the new tax to replace the €100 household charge “would not be a million miles away” from the example cited in an ESRI report focusing on a tax rate in the region of €2.50 to €3 per €1,000 of house value.
A rate in this region is geared to bring in revenue of about €500 million per year. The report published in April also recommended exemptions for the low-paid.
Minister of State for European Affairs Lucinda Creighton told The Irish Times last week there should be no automatic exemptions from property and water taxes for pensioners or social welfare recipients, although ability to pay should be taken into consideration.
The ESRI report explored various options, rather than providing a definite recommendation of a particular blueprint, although it noted that site market values are rarely used in developed countries. It noted differences between the average prices of houses in Dublin and the rest of the country mean that if a single tax rate was used nationally, the burden on Dublin homeowners would be “disproportionate”.
It also recommended the new property tax take account of mortgage interest payments or mortgage debt outstanding in a move which could go some way towards dealing with issues such as mortgage distress and negative equity.
The International Monetary Fund is today expected to warn the Coalition about potential delays in the introduction of the new tax, although the source said the report had a long-term focus and “doesn’t have immediate considerations for the budget”.
A spokesman for the Department of Finance described the IMF document as “entirely separate from the EU-IMF programme”. It was a consultation carried out with all countries which are members of the fund and focused on medium to long-term policy issues, he added.
Ireland’s social welfare payments will also come under scrutiny in the IMF document. The European Commission recently said more needed to be done to alleviate and eliminate problems caused by some features of the social welfare system. The commission highlighted “the broadly flat and open-ended unemployment benefits that do not diminish with the duration” of unemployment.
A tax of 0.25% calculates to €250 In every €100K Your home is valued at.
If a house is valued at €180k the cost will most likely come in the €500 bracket.