Taxing property

In a recent post I considered our tendency in this part of the world to encourage home ownership both as a form of housing policy and as a form of personal investment. The latter aspect looks less of a good bet these days, but we have had problems in the property market before that were soon forgotten as people went prospecting for real estate gold again remarkably quickly.

Escalating property prices look great for those who see the value of their investment rising, but are terrible for everyone else. Getting on the property ladder becomes harder and harder, property values inflate the cost of living, speculation becomes the norm, and at some point the bubble bursts with terrible consequences.

One way in which property values can be contained at least a little is through property taxation. We had that in the form of domestic rates for some time before these were abolished. In the UK they were eventually replaced with the Council Tax, while in Ireland we have no property tax; this not only creates market distortions, but also deprives local authorities of the means to fund their services properly and competitively.

Now the Economic and Social Research Institute (ESRI) has produced a report recommending the introduction of a property tax amounting to 0.4 per cent of the value of the property. As a measure to reinvigorate local government, produce appropriate funding streams and contain the tendency of the property market to over-heat it makes a whole lot of sense, and the recommendation should be implemented.

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2 Comments on “Taxing property”

  1. Vincent Says:

    What about mortgage tax relief.
    For coupled with this idea we are going to kick up some weird ones yet again. Not least having the civil service sawing sawdust adding and subtracting.
    Why not simply get rid of the property tax reliefs and charge for those free and clear a flat % relative to rents in the area. So if you get E1000 a month your bill would be 200. But so would the family house next door pay that 20%.
    In’s time to treat property realistically. I’m not so certain about your idea that the local authorities get more. For I believe we are over governed as it is.
    It would be far better if we had simple ‘Yes, you can. NO, you can’t.’ laws. In that yes you can build and here are the parameters. One off housing in Connemara, grand. As long as you cannot see the thing or any of the infrastructure. And if that means a troglodyte existence, then so be it.
    But this system of niggly little irritations where one ends up writing to the TD to have drains cleared or water tested. When you should ring and that day it’s sorted.

  2. copernicus Says:

    As long as one invests ina home to live in, I do not see it as a problem. Other forms of investment-shares, bonds etc.. are fraught with problems. For example, I invested a £1000 in an investment scheme, some 8 years ago by a a respectable mutual society and it is worth £800, now. My house has atleast doubled its valu in 20 years.

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