Property Tax – Why Dubliners Should Pay More

Some have complained that the residential property tax (to be applied in Ireland from 2013), and to be based on the market value of the property, will be unfair to Dubliners, because property values are higher there than elsewhere in Ireland. The value of the 298 properties sold in Dundrum, County Dublin are compared with the value of the 25 properties sold in Dundrum, County Tipperary, over the 2010-2012 period, using the Residential Property Price Register (RPPR). The median value (and associated full-year property tax in brackets) for Dundrum, County Tipperary are €100,001-150,000 (€225); the equivalent for Dundrum, County Dublin are €350,001-400,000 (€675); the median property owners in County Dublin will pay €450 more in annual property than their counterparts in County Tipperary. But the former have manifold advantages over the latter, including easy access to tax-payer subsidised infrastructure and services in:

  • Transport
  • Culture
  • Sports
  • Education
  • Health
  • And the widest range of life style possibilities, job options and entrepreneurial potential on the island.

These benefits are reflected in property prices and therefore in property taxes; this is fair and appropriate. The timeliness and transparency of the property price evidence available on the RPPR is impressive, as is the quality and clarity of the background information and responses to ‘Frequently Asked Questions’ provided by the Revenue Commissioners. One weakness is that the price is not converted into price per M2. This gap should be corrected as a matter of urgency. The data, combined with the Revenue Commissioners’ ability to nudge us towards compliance with a variety of soft and hard measures, make it likely that most of us will comply.

Background

In Ireland, property taxes (or ‘rates’ as they were known) on domestic dwellings were abolished by central government in 1977, and this was followed by elimination of property taxes on agricultural land. In order to help make good the shortfall in revenues, local authorities imposed levies on new developments to cover the costs of infrastructure and services provision, and central government increased the tax on property at the time of acquisition (stamp duty). What is notable about both of these revenue streams is that their magnitude depended on the volume and value of new development and property transactions. With the collapse of the property market, in terms of both volume and value, these two revenue streams fell sharply.

It is clear that confining the tax base to transactions and new development made revenues very dependent on the level of economic activity in the property market.  This contributed to the sharp fall in government income and the rise in the deficit. This in turn played its part in Ireland’s exclusion from international money markets and the request to the European Union (EU) and International Monetary Fund (IMF) on November 21, 2010 for financial support. Agreement was reached in December 2010, the terms of which are included in the EU/IMF Programme of Support for Ireland.[2]

Not surprisingly, this agreement includes a requirement to re-introduce a property tax (p. 9):

On the tax side, we will build on the base-broadening measures outlined above and establish a sound basis for sub-national finances through a new residential-property based site value tax”.

In December 2012, the government announced its decision to introduce a tax, payable by the property owner, and administered by the Revenue Commissioners, based on the market value of property in early 2013, at the rate of 0.18% of market value up to €1 million, and 0.25% on all value above €1 million .[3]

This has engendered a reaction that this is unfair to property owners in Dublin where property values are much higher than elsewhere in the country. Also, it is argued that because of economies of scale and scope, the cost of providing some public services – parks, water, roads, waste collection etc. – per household are lower in Dublin than elsewhere, and so the revenue required per household will be lower.

This is the urban analogy to the case made by rural residents, some of whom objected to the requirement to assess the performance of septic tanks.[4]

The Property Value Difference – Two Dundrums Compared

The Property Services Regulatory Authority maintains a publicly available property price register covering all residential transactions since January 2010. It provides the date of each sale, its value, and its address but unfortunately nothing about the size or nature of the property. We can get a sense of the discrepancy between Dublin and the rest by comparing the records for two Dundrums – one in south county Dublin, the other in Tipperary.

Over the 2010-2012 period, there were 25 units sold in Dundrum County Tipperary, and 298 in Dundrum County Dublin. If we assume that the property tax rates agreed by government will be applied to these prices, the taxes payable will be as shown in Tables 1 and 2 .[5]

Table 1. Property Tax in Dundrum County Tipperary, based on sale prices 2010-2012.

Property Value Range Number of Properties Annual Property Tax Per Property €

Property Value Range Number of Properties Annual Property Tax Per Property 
€200,001-€250,000 3 €405
€150,001-€200,000 3 €315
€100,001-€150,000 11 €225
0-€100,000 8 €90
Total 25  

 

 

 

 

Source: http://www.propertypriceregister.ie/ for property prices, and http://www.revenue.ie/en/tax/lpt/index.html for annual tax rates

The median property value is 100,001 to 150,000, with a tax liability of €225.

Table 2. Property Tax in Dundrum County Dublin, based on sale prices 2010-2012.

Property Value Range € Number of Properties Annual Property Tax Per Property €
1,805,000 1 3812
1,300,000 1 2550
1,050,000 1 1915
950,0001-1,000,000 2 1755
850,001-900,000 1 1575
800,001-850,000 1 1485
750,001-800,000 1 1395
700,001-750,000 3 1305
600,001-650,000 4 1125
550,001-600,000 10 1035
500,001-550,000 7 945
450,001-500,000 20 855
400,001-450,000 34 765
350,001-400,000 56 675
300,001-350,000 40 585
250,001-300,000 37 495
200,001-250,000 35 405
150,001-200,000 32 315
100,001-150,000 6 225
0-100,000 6 90
Total 298  

Source: http://www.propertypriceregister.ie/ for property prices, and http://www.revenue.ie/en/tax/lpt/index.html for annual tax rates

The median property price in Dundrum (Dublin) is €350,000-400,000, with a median tax liability of €675.  This compares with a median tax liability of €225 in Dundrum (Tipperary).

The RPPR Property Price Register is an excellent resource, providing real data in real time but it does not provide data on the size [square metre (M2)] of the properties or any other characteristics. Such information would be very valuable in addressing valuation of two properties in the same area that are significantly different in size. Since most European countries provide valuation data per M2, it would also be useful as a help in identifying emerging price bubbles in the future; for example, if Dublin prices per M2 were rising well above those in Stuttgart or Lyon, this would be one indicator that there may be problems looming.

Why It Is Right That Dublin Households Should Pay More

Median households in Dundrum (Dublin) are likely to pay €450 more than their counterparts in Dundrum (Tipperary).  The gap widens at the upper end, where the annual tax payment on the most expensive property sold in Dundrum (Dublin), valued at €1,805,000, would be €3812, compared with a tax payment of €405 payable on the most expensive property sold over the same period in County Tipperary, valued at €247,000.

Houses in Dublin are worth more, because there are many benefits to living and working in the Dublin region; these advantages get capitalised into property values. Key Dublin advantages relate to transport, education, health, access to places of worship, religion and lifestyle, culture and sports, enterprise and jobs. Many of these benefits can be characterised as what economists call ‘option value’, i.e. the value that most of us attribute to the choice of being able to avail of a good or service, even if we never take up the opportunity; there is real benefit in having the choice available.

Transport

Internal: With its existing (and generally) improving bus services (more bus lanes, real time timetabling etc.) light rail (Luas lines being connected – which is relevant to Dundrum, Dublin), commuter rail (DART etc.), cycle lanes, footpaths and M50 motorway, Dublin is getting close to international standards in internal connectivity, a diversity and density unmatched anywhere in Ireland, including Belfast.

External: The hub (Dublin) and spokes (to everywhere else) transport system give Dublin residents easy access to other parts of the island. Regular train service – including hourly to Cork and Limerick, 2 hourly to Galway and Belfast – buses going everywhere with increasing frequency, a motorway system that brings almost everywhere within a 3 hour commute for business or recreation travel by Dubliners. Dublin airport (average of 457 commercial movements per day, compared with 64 for Cork, and 57 for Shannon in 2012) is the main artery for connection with the outside world, and Dublin Port and Dun Laoghaire also provide regular ferry services.

Education

The advantage is especially notable at 3rd level, with three universities and a range of institutes and specialist academies (music, design etc.) within cycling distance of most residents.

Health

Amongst physicians, Ireland has the lowest share of specialists in Europe. This means that access to such care is a key pinch point for patients. But a majority of specialists are Dublin based, as are the specialist hospitals and associated equipment.

Religion & Lifestyle

Agnostics, Anglicans, Atheists, Bahai’s, Baptists, Buddhists, Catholics, Charismatics, Doubters, Evangelicals, Falun Gong, Hindus, Jehovah Witnesses, Jews, Methodists, Muslims, Orthodox, Presbyterians, Secularists, Taoists, Unitarians and many others can find companionship and fellowship in Dublin. All lifestyle choices are available.

Culture & Sport

Access is free to much public cultural infrastructure and services including: three branches of the National Museum [Archaeology (Kildare Street) Natural History (Upper Merrion Street) Decorative Arts and History (Collins Barracks)]; the National Gallery (Clare Street); the Chester Beatty Library, Dublin Castle. In terms of what they offer, and how it is presented, these are of a very high standard, and welcome families and children. After considerable public investment, Dublin Zoo is now of international standard and one of the biggest tourist attractions in Ireland.

Specialist cinemas include the Lighthouse and the Irish Film Institute; the National Concert Hall provides a flow of classical music offerings; there are a number of venues provide international calibre theatre, and a variety of clubs and large entertainment centres.

All major international games are played in Dublin; Croke Park and Aviva Stadium dominate in terms of ability to host major international events; the RDS is the venue for the major horse show jumping event of the year. Noisy concerts galore – Croke Park, RDS, Marley Park, RDS ….

Enterprise & Employment

Cities agglomerate people, ideas, innovations and economic activity, because they have economies of scale and scope (diversity of skills and opportunities). They are about choice, from the profound to the trivial (a sign seen in New York City – ‘Tattoos available, with or without pain’ – exemplifying the latter). And the gap between the largest and the others tend to widen as these advantages re-enforce each other. The Irish American Willie Sutton famously explained that he robbed banks because “that’s where the money is.” In Ireland, Dublin is where most of the money is. Ready access to this market – and the diversity of consumers and their demands – is a huge advantage to a start-up business. And the connectivity to the rest of the world via Dublin airport makes it a good place to expand internationally. Even in a depressed economy, there is likely to be more job turnover and more enterprise and employment opportunities in Dublin than elsewhere.

Conclusions

All of the above options / amenities are available to the residents of Dundrum, County Dublin; most can only be accessed by residents of Dundrum County Tipperary if they come to Dublin. Of course the motorway and rail spokes go both ways, so that physical access is easier than before; and where it exists, high quality internet access can reduce the value of Dublin’s advantage. But geography still imposes iron constraints, and gives those in the capital manifold advantages that are reflected in the value of property. Urban dwellers have many legitimate causes for complaint, but the higher value of property in Dublin, and the associated higher property taxes property owners will pay, is not one of them.

The reason Dublin house prices are higher than Tipperary house prices is in part because of the greater benefits created there by society. It is not surprising then that Dubliners should be asked to contribute more via property taxes. The case made by rural lobbyists against the inspection of septic tanks was inappropriate and misconceived. The case against the property tax in Dublin is similarly misguided.The timeliness and transparency of the property price evidence available on the RPPR is impressive, as is the quality and clarity of the background information and responses to ‘Frequently Asked Questions’ provided by the Revenue Commissioners. This, combined with the latter’s ability to nudge us towards compliance with a variety of soft and hard measures, makes it likely that most of us will comply.

Notes:

[1] I am grateful to Donal de Buitleir, Sean Moriarty, Cormac O’Dea, Cormac O’Sullivan, Mary Walsh and Brendan Walsh who commented very usefully on an earlier draft. The usual disclaimer applies.

[2] The Troika programme provides up to €85 billion over a three-year period to assist public finance needs and facilitate banking assistance. The package is provided equally by the ESFM, the EFSF, the IMF, an Irish contribution through its treasury cash buffer and investments by Ireland’s National Pension Reserve Fund.

[3] Discussion of the policy available at: http://www.publicpolicy.ie/the-new-property-tax/

[4] See  ‘Invest in Cavan’ for details of the proposal, and why it deserved support.

[5] This assumption is likely to exaggerate the taxable value of properties sold in 2010 and 2011; the residential property price index (January 2005 = 100) declined from 90.5 in 2010  to 68.8 in November 2012 – see http://www.cso.ie/en/media/csoie/releasespublications/documents/prices/2012/rppi_nov2012.pdf. Property will be valued in early 2013, and this value will apply from 2013 to 2016

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Frank Convery

Chairman, Publicpolicy.ie

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14 Comments

  1. Ger 21 Jan 2013 at 3:41 pm

    I would also add, that ownership of a more valuable asset should in itself be a justification of a higher tax rate. Even if a homeowner has a low income, or lives in a small property -nevertheless the value of their home is a component of their wealth, and in most cases is the largest portion of an individual’s wealth. Fairness demands that the wealthy pay more tax.

    Many politicians talk liberally of imposing wealth taxes, but refuse to contemplate a property tax -which is a tax on by far the largest segment of personal wealth in ireland. Inexplicable. I welcome a property tax and would like to see it accompanied by taxation measures aimed at other forms of wealth that are untaxed.

  2. Donal O’Brolchain 22 Jan 2013 at 12:28 pm

    IMO, there are three critical points that you overlook
    1. The State/Government already “penalises” Dublin our capital city by not paying rates on the properties it occupies;
    2. Your reliance on the Property Price Register lacks merit – because it has been badly designed and poorly implemented;
    3. The funds from the property tax will not go to local authorities directly;
    In addition, you do not deal with the context for property tax as set out in the 2009 Commission on Taxation and the Thornhill Report on the Design of a local property tax.

    1. Dubliners are already penalised by the lack of rates on land and buildings occupied by the State.

    While this also applies to other areas (arising from the incoherent decentralisation policies adopted over years), Dubliners bear the brunt of this shortfall in funding for local government being the capital city with all that implies in terms of State activities. This is exacerbated by the fact that most of these buildings are in the Dublin City – the council with the largest population in the state. Dublin City Council faces strong competition for commercial rates from the newer councils of Fingal, South Dublin and Dun Laoghaire Rathdown. and from the commuter belt for the new property tax.

    2. The Residential Property Price Register (RPPR) leaves a lot to be desired, both in terms how the way the search facility and the data recorded.
    As an example, take 21 Seafield Crescent, Booterstown, Co. Dublin. PPR records that it was sold on
    • 21 December 2010 for €590,000 (http://www.propertypriceregister.ie/website/npsra/PPR/npsra-ppr.nsf/eStampUNID/UNID-6C224A7CA4D5F14080257A7D00567580?OpenDocument)
    • 22 December 2010 for €475,000 (http://www.propertypriceregister.ie/website/npsra/PPR/npsra-ppr.nsf/eStampUNID/UNID-6EB677E8940C673D80257A7D005667B5?OpenDocument).

    While these records may actually reflect real transactions, it does strain credulity that a property would be sold twice in a 24 hour period at a loss of nearly 20% – even in 2010.

    Given that I came across these strange record on casual browsing, I do wonder what a systematic analysis of the complete data set would reveal.

    First impressions do not inspire confidence, in the light of what emerges from other government IT projects.

    3. Property Taxes are meant to be raised and spent locally – are they not?
    .
    Following the Taoiseach’s announcement that 65 per cent of property tax revenues will be ring-fenced for the areas it is collected in (http://www.independent.ie/national-news/taoiseach-insists-65pc-of-property-tax-will-be-spent-locally-3358378.html), it is now clear that this is just another means of transferring funds from Dublin to the rest of the country. This is simply a continuation of the pattern contained in other taxes and charges which do just that eg. income tax, USC, PRSI, excise duties, VAT, CGT.

    As implemented, local authorities will not have any incentive to get better value for money from this property tax. All face the fact that they can only rely on two thirds of the tax collected being available to them. Central government will use the rest at their own discretion. We can only presume that central government will continue to allocate funds for local purposes in arbitrary and whimsical ways. Just look at the examples of the allocation of National Lottery funds.

    Couple this with the lobbying power of non-Dublin councils, due to the completely unequal representation of citizens on local councils in different parts of the country..
    Why has
    • Carlow got 4 times more councillors per capita than Dublin City;
    • Galway City got twice as many councillors per capita as Fingal?

    The incentives of this property tax for local authorities is to continue to be just as subservient and obsequious to central government as they have been since the abolition of rates on domestic properties in the late 1970s.

    Context
    Given your very strong defence of the new property tax impact on Dublin, it would be helpful if you would put this support in the context of other measures on the taxation of property put forward in the 2009 Commission on Taxation eg.
    • An additional capital gains charge on windfall gains from increases in land values due to rezoning decisions;
    • A recurrent property tax on land zoned for development.
    Have these measures been implemented

    If not, is PublicPolicy.ie actively advocating that these measures be implemented? If so, when?

    To what extent is your position on this property tax sustainable in the light of the following comment from the Thornhill report on the design of a local property tax,
    “In that regard, it is important to note that the overall distributional effects for the total system of taxes and benefits can be regarded as the ultimate test of equity. As the Commission on Taxation (2009) stated “Equity must be considered in the context of the overall tax system. A lack of progressivity in one area of the system may be compensated for by having a high degree of progressivity in other areas, or by focused direct expenditure – which, of course, is financed from tax revenue.” (par 1.2.5 p.15)

  3. tom coffey 22 Jan 2013 at 8:37 pm

    Central Gov owes Dublin City Council around €290 million in Rates which they have refused to pay over the last 10 years. The local property tax is being collected centrally and only 65% is going back to Dublin City Council & other councils in the Dublin Area. The local property tax is badly thought out and poorly implemented. It also breaks the link between local taxation and local representation which weakens democracy. It is an anti urban tax designed by a central gov system which has a culture of secrecy and unaccountability. It should be collected locally and spent locally. We know that our state is so badly run it has become bankrupt as a result of poor management. Relying on the property sector for statistics to put forward the argument for Dublin paying for everyone else will only lead to further delusional economics.

  4. William 22 Jan 2013 at 11:04 pm

    Arguments for having cheaper property tax in cities:
    * It costs less per person / house to provide services
    (transport, education, telecommunications, etc)
    * More environmentally friendly than rural dwellers
    (e.g. less fuel used for transport)
    * People in Dublin are forced to pay more for similar standard of housing

    One other point:
    If the property tax is called a local tax, then all the proceeds should stay locally.

  5. Donal O’Brolchain 24 Jan 2013 at 9:44 am

    “The case against the property tax in Dublin is similarly misguided.The timeliness and transparency of the property price evidence available on the RPPR is impressive,”

    Given that Irish Times Colm Keena reported (ITimes Business 23 January 2013) that “Price Data is already part of the Land Registry system, though not publicly available”, surely it is poor public service for yet another empire to be built which is “another partial, parallel structure containing information about property”?
    http://www.irishtimes.com/newspaper/finance/2013/0123/1224329188796.html

    This is particularly true at a time when the Government is in receivership.

    What is really misguided is uncritical support for a property tax, using limited evidence, that is meant to support local government.

    The particular form of property tax chosen is more evidence of an emphasis on policy effectiveness at raising tax, from wherever, being pursued at the ultimate expense of democratic legitimacy.

    The Thornhill report did look at other options, but in the worst traditions of Irish central government, it did so in secret.

    The choice of tax, implementation and use of of funds generated is yet another example of the failure of Irish governance, as pointed out by one well-entrenched observer 60 years ago
    “The success of any public policy depends no less on its intrinsic merits than on the quality of the public service that executes it… The civil servant’s task is at any time a difficult one; it will not be lightened if he fails to bring the public closer into his confidence…In shaping
    the Civil Service to the satisfactory discharge of its present-day responsibilities, the public may reasonably expect to know how the official mind works and to understand the thought that animates it.”
    Patrick Lynch. Studies. 42(1953). p. 259-260

  6. C Daly 24 Jan 2013 at 1:53 pm

    I agree with Williams points above:

    – Higher population density allow for more sustainable and cheaper public infrastructure. Dundrum (Dublin) is one of the few areas in the country where light rail is feasible for example.
    – Dubliners already pay higher property prices for the privilege of living in Urban areas. These properties are often smaller and inferior than those in rural areas.
    – Dubliners have no control over the planning of rural county councils. Why should taxes in Dublin be redistributed to areas where it is costly to provide public infrastructure & that should not have been developed in the first place

  7. Vince 24 Jan 2013 at 7:42 pm

    This would work if it was even-stephen. But it’s not. All the counties have things like public swimming pools and libraries that are very scarce on the ground when you match citizen for citizen. Yes, if one uses a tied geography when you say the big cities are better served, but no one uses mileage as a metric. Time is how you call it. It is 20min from Loughlinstown Hospital to UCD. Another 15 to the Green. Moynooth to O’C’s St on a bus is an hour. Maynooth to Connelly 35mins. Does anyone know what the distance is from any point in any of the cities. So, would I drive 25miles to Clonmel to go swimming, you betya. Doing 25miles in Dublin would certify you. I met a guy once who was working at UCD and got a a job at NUI,M. He remained living somewhere around Rochestown. I would call that a 3 hour journey.
    Anywhos, I think you can easily turn this on its head. The Rate should be less in the cities since service delivery is much more efficient.

  8. Donal O’Brolchain 26 Jan 2013 at 10:28 am

    This property tax will not go away as an issue, because it has been badly throuht through and poorly implemented. As such, it is an example of the deficiencies of Irish central government – at both political and senior public service levels.

    Take this recommendation from the Thornhill report on the design of a local property tax – a report prepared – in secret – by an Interdepartmental committee, leaked in part and then used as the basis for the Government decision on the new property taX

    See the following extract from the Thornhill report on the the Design of a Local Property Tax
    “Arrangements need to be made to include data from all relevant agencies, including the LGMA, individual local authorities, utility companies, An Post, the Property Registration Authority of Ireland and Ordnance Survey Ireland.
    Recommendation:
    • The development of a comprehensive data base of residential properties in the State should be undertaken as a priority project. The Group recommends the immediate establishment of an
    implementation group, under the leadership of the Office of the Revenue Commissioners to address this challenge.”
    http://www.environ.ie/en/PublicationsDocuments/Fil

    Trouble is that most of this work has already been done by An Post and Ordnance Survey Ireland.

    “GeoDirectory is the most comprehensive and clear address database available of buildings in the Republic of Ireland.GeoDirectory was established by An Post and Ordnance Survey Ireland to identify the precise address and location of every residential and commercial property in the State. We have helped hundreds of companies and organisations to cut costs and to accurately address their clients and customers, revolutionising their businesses.

    The ultimate Irish address database, GeoDirectory assigns each property its own individual fingerprint – a unique, verified address in a standardised format, together with a precise geocode.”
    http://www.geodirectory.ie/About-GeoDirectory.aspx

  9. Donal O’Brolchain 29 Jan 2013 at 3:04 pm

    “It can be seen that the cities top the list of spending per capita – suggesting there may not be economies of scale in this expenditure. This provides further support to the argument that city dwellers should pay more for the services provided to them.

    There is of course one important aspect that I can’t get at in this data which is the use of services in Dublin and other cities by those who live elsewhere. Dublin City Council provides, for example, road maintenance for those who commute to Dublin but who live in other areas. It is noticeable for example that Kildare, Meath, Fingal, Laois and the counties which have cities locate din them (Cork, Galway and Limerick) are located towards the foot of the table. It may be that residents in these areas are benefiting from the larger spending in the cities.”

    Yes, indeed – some qualification. I suggest you broaden the framework beyond what the Government has decided and the basis on which it made its decision.

    Do you really believe that Central Government will allocate more the funds raised in this new residential property tax to the cities, in order to pay for the city infrastructure used by those in the commuter belts?

    I actually do not have any problem with people paying more in property taxes to fund local government in the the areas in which they live – provided it all goes to the local authority directly. Other taxes can be used to ensure more or less equal treatment of citizens.

    I do object strongly to the particular form of residential property tax adopted for a number of reasons
    1. By focusing on market value, it continues the link between notions of wealth and housing, which is exactly what got us (and other jurisdictions eg. Spain) into the current financial crisis;
    2. I am not convinced by the Thornhill report arguments against a residential property tax based on the area of the actual residence;
    3. The local authority has little discretion in setting the tax;
    4. This continues the pattern of long feedback loops between citizens and costs of providing public services;
    5. The fact that the central Government will allocate the taxes gathered to local authorities leaves open the possibility (perhaps, reality) for whimsical and arbitrary action as we have seen in recent cases on the location of medical facilities.

    What we are seeing is central Government (the Thornhill Group consisted solely of central government officials) reinforcing the power of the centre, despite evidence that this power is abused and/or used incompetently to deal with the complexities of contemporary societies.
    Those in power use secrecy to try to hide not just corruption, but also bad management and ineffectiveness. see my comments on FoI here
    http://www.thejournal.ie/readme/column-cronyism-and-corruption-–-one-quick-change-would-help-fight-them
    and here
    http://www.irishtimes.com/newspaper/letters/2012/0710/1224319720550.html

    With large levels of non-compliance (more than one third) in payment of the Household and the Septic Tank, the powers that be are putting (misguided) policy effectiveness ahead of democratic legitimacy.

  10. Una Nic Fhionnlaoich 13 Apr 2013 at 4:38 pm

    Re: “Property Tax – why Dubliners should pay more” http://www.publicpolicy.ie)

    Dear Sir/Madam

    I wish to take issue with your conclusion that the case against the property tax in Dublin is misguided.

    In my opinion, most people would accept the principle of the need for a property tax. They would also accept the pain if it was seen to be a fair and transparent tax, which the current tax is not, particularly in Dublin.

    As your study amply demonstrates, there are undoubtedly facilities available in the city, which are not to be found in rural areas, due to increased population densities and economies of scale. These are often discussed. However, there are many facilities enjoyed exclusively in rural areas, which are not widely discussed and need to be addressed.

    1) The first major issue is that housing is considerably cheaper to buy in rural areas, so rural dwellers do not have the massive mortgages of their urban counterparts and therefore, with similar incomes, rural dwellers have much more disposable income. And while the house in the city may then be more valuable, it is not the type of wealth which can be easily accessed.
    2) Wealth in rural areas is largely found in land, yet land is exempt from the tax, although it could arguably realise about €226 million (Note1) per year. If market value is a valid basis for assessing a dwelling to property tax, why is it not equally valid for land?
    3) The current tax, based on the market value of a dwelling,(Note 2) does not adequately reflect the facilities which rural dwellers enjoy on a daily basis, in particular the size of the property. There are magnificent family homes sitting on very large sites dotted around the country, which will be liable for only a few hundred Euro in tax, while small two bed houses in South Dublin are being assessed for a tax of more than €1,000, and larger houses in Dublin will pay much more.
    4) As well as larger houses, rural dwellers generally enjoy the benefits of free parking at home and locally and the absence of traffic jams, noise, pollution etc.
    5) The tax is particularly discriminatory against pensioners on modest incomes in South Dublin, who have been living in their homes for upwards of fifty years and who are being forced to find an extra thousand Euro or two each year to stay in their homes.
    6) While not wishing to personalise the issue, Laughton house in Co Offaly, the home of Minister James Reilly, epitomises some of the flaws in the current property tax. It’s valuation of €700,000 (Note 3) will attract an annual property tax of €1,215 and this is the same as the tax attaching to the aforementioned two bedroom house in South Dublin. But Laughton House has 13 bedrooms, 5 reception rooms, a drawing room, a library, a billiard room etc., as well as the potential for hire for small private functions. It is already eligible for tax breaks on the basis that it is on public view for a certain number of days each year. On top of that the house is sitting on 150 acres of land and the market value of the entire property is €2.5 million. However, it will still only pay the same tax as the two bedroom semidetached house in South Dublin.
    7) Tallaght in Dublin and Galway City are two areas, one in Dublin city and one outside, that have similar populations. One might assume that there are superior facilities in the Dublin area but, if we look at hospitals, Galway has four and Tallaght has only one. Galway has a university and Tallaght has none. Galway has a Yeats institute whereas Tallaght has no comparable college. On this brief survey Galway might be expected to pay more tax than Tallaght but this is not the case. One could argue that there are more facilities available to the residents of Tallaght in the greater Dublin area, but they are then competing with the rest of the populations of Dublin and outside Dublin for access to those services.
    And it can sometimes be easier to access the venue from outside the city than to have to cross the city through the traffic – as your report says, the motorway and rail spokes go both ways.

    This tax has to be equitable and it has to be perceived to be equitable, in order to be sustainable. The huge discrepancies in rates payable in Dublin and in the rest of the country are not justifiable, and particularly when land is being ignored. We need a property tax that genuinely reflects the wealth in assets around the country as a whole, and one which has some realistic regard for ability to pay.

    I would be much obliged if you would put this alternative view on your website in order to balance the discussion.

    Thanking you
    Una Nic Fhionnlaoich

    Notes:
    1. There are about 12,000,000 usable acres of land in the country. An average valuation by Knight Frank in 2012 of approximately €10,500 per acre applied to this figure would make a wealth tied up in land of €126 billion. At 0.18% this would produce an annual tax income of €226 million.
    2. Note: EU/IMF Programme for Ireland suggested a tax based on site valuation, not market value.
    3. Irish Independent, Monday 4th February 2013

  11. Mark Wadsworth 18 Jun 2013 at 3:49 pm

    Some excellent Home-Owner-Isms there from UNF:

    “there are many facilities enjoyed exclusively in rural areas, which are not widely discussed and need to be addressed”

    Yes of course, by looking at selling prices we get a good indication of the VALUE of those facilities, and that is what you pay the tax on. Job done.

  12. Mark Wadsworth 18 Jun 2013 at 3:53 pm

    UNF is the gift which keeps giving

    “4) As well as larger houses, rural dwellers generally enjoy the benefits of free parking at home and locally and the absence of traffic jams, noise, pollution etc.”

    Yes of course. And this is all reflected in the VALUE rural homes.

    You can choose a low price for peace and quiet, space, but no jobs within easy commuting, that has a low value and a low tax – or you can choose convenience and noise, which has a higher value and a higher tax.

  13. Peter James 8 Jun 2016 at 1:19 pm

    Dublin already pays 55% of Ireland’s tax. Individual Dublin taxpayers pay 75% more compared to the Irish average.

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