Spoofery on property tax

Almost everybody who isn’t a politician agrees that politicians lie. Actual politicians don’t see it that way, the see it as being forced to accept a series of working realities which unveils the way the system ‘actually works’ versus how we would ‘like it to work’. The truth is that in effect they do lie when you compare election promises to results, but they don’t do it with total intent.

But sometimes they do, and we are seeing that with our proposed property tax which is a clear demonstration of lap-dog leaders who want nothing more than to be ‘box tickers’ for the troika. You see, we are being told that ‘no decision has been made’, but that is contrary to the facts surrounding the debate once you do some digging.

It is being billed as a ‘wealth tax’, but wealth is a positive number when you subtract liabilities from assets. Simply put, people in negative equity have negative wealth on their property, so taxing your home is not a ‘wealth tax’, at the same time there will likely be deductions for people on lower incomes – which means that it isn’t about wealth, it’s about your flow of cash and by function that makes it a type of income tax where owning a house makes you liable.

A paper from this April by the ESRI was titled ‘property tax in Ireland, key choices’, and it called for a market based tax. Who commissioned this paper? The Department of Finance, Michael Noonan’s department, the same Michael Noonan who said ‘nothing has been decided’.

Is that true? Compare what he said to the facts, the facts are as follows, the Commission for Taxation (2009), The National Recovery Plan (Fianna Failure 2010) and even Fine Gael & Labour’s very own Government for National Recovery (2011) all called for a Site Value Tax – a tax on land not houses – that we have covered here in the past.

More importantly, sticking with the current government, on page 16 of their own programme it states that we will consider different options of site value tax (the implication being no option where it is market value tax) and that this would take into account mortgage distress and fund local government.

It’s all lies in practice, and that is why we say politicians don’t tell the truth, because that is their official record, that is what they said they would do and now we are going to get something different.

Taxing houses instead of land will mean land-bankers, developers and NAMA will all get off the hook. Apart from being yet another Labour/Fine Gael contradiction of policy, it will still tax those in negative equity – and I don’t know about you, but I call those with €100,000 worth of negative equity as being ‘distressed’! And lastly it isn’t going to fund local governments proportionately because it’s going to be a national tax!

I’ll explain that last point, as we are going to raise taxes on a ‘household basis’ it is worth considering what is spent on a ‘net household basis’ by local authorities. At the top of the list is Cork City where the city council there spends €2,306 per household, then Monaghan where they spend €2,189 per household

This information is tricky to get because you have to look at local government budgets, then take away Commercial Rates, income from goods and services then compare the Local Government Fund which makes up the rest and divide that by household numbers.

The end result is interesting, because South Dublin (where all of our posh folk live) have only €1,149 spent on every household by the local authority, and lowest of all is the Royal County of Meath which comes in at €1,119 per household, the lowest cost per household in the country.

That should be something to be proud of right? Being efficient? Keeping costs down? While it may be, it will also mean that because we aren’t linking the tax to local authority budgets that you’ll get stung paying more, doing it nationally on market values means actual costs are thrown out the window, the cost to serve a property might be high but if it’s value is low they don’t pay much.

Might seem fair if you focus on market values, but it belies everything else, costs are what has to be covered here, and many in cities are in the biggest negative equity traps in the nation.

And why is it that efficient counties will be paying more per household than the likes of Monaghan or Longford (€2,091 per cost household)? Make no mistake, this is just a way to make a golden goose of city dwellers and create cap in hand country bumpkins of the rest of the nation.

It won’t be long before the jackeen and culchie slagging matches factor in things like ‘we pay for your roads bog man!’ or ‘we ripped you off city rat!’ What a shambles, and sadly, this is a shambles brought on by our own democratically elected liars, we should all give each other a high five… in the face… with a hammer.

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