The idea of a property tax in Ireland was mentioned by the Fianna Fail government back in 2010 – in their 4 year Plan . The IMF and the EU are strongly in favour of a property tax – and the current Household Charge is just a temporary measure to show that Ireland has at least done something towards bringing in a property tax. All parties seem to stress that the tax is required under Ireland’s agreement with the troika.
Of course – don’t be surprised if Fianna Fail complain about the property tax – even though they signed up for it and would also have to introduce it if they were in government.
The new property tax is expected to be in force sometime during 2013.
In January 2012 a Property Tax expert group was set up to consider the best way to implement the new charge. They have completed their report – and it is in the hands of the Minister for Finance but has not yet been made public. There have been a few leaks over the summer – such as confirmation that Revenue will be responsible for collection of the new Tax.
Full details are not expected until Budget 2013 (Due in December 2012)
This week it has also been confirmed that PAYE workers will have their property tax deducted from their wages. The actual amount of tax will depend on the value of the property – but the valuation is going to done on a self assesment basis .
Earlier studies into property taxes in Ireland have suggested annual rates between 0.25% and 0.4% of the house value . That would mean a tax of between €500 and €800 on a €200k house .
See more details on the possible Property Tax Levels here
Other suggestions by the Commission on Taxation in 2009 included the following :
A tiered Property Tax – based on the value of the house.
Exemptions for 7 years from the date stamp duty was paid on the house.
Tax to be charged on vacant and occupied properties.
Waivers for people on lower incomes
This week – Liam O’Donnell, president of the Institute of Professional Auctioneers and Valuers, described the introduction of a property tax as “absolutely crazy”. He said “Undoubtedly it will cause problems. It will certainly affect the recovery of the property market,” .
The EAPN (European Anti Poverty Network Ireland) say that they “agree with the need for a broader tax base, particularly property taxes. Experience across Europe shows that there is a direct relationship between low overall tax levels and poverty. In particular, loading tax onto VAT and PAYE, as opposed to property tax, creates inequities and poverty traps.”
If the Revenue are relying on the Household Charge database to collect the Property Tax – they will have a big problem – at least half a million home owners still haven’t registered !