Home owners face new tax burden of up to €1,000 a year
21 Aug 2009
Property tax on every home in the country, averaging up to €1,000 a year, is among the recommendations of the Commission on Taxation, which will deliver its report to the Government in the next few days.
The report, compiled by the Government-appointed commission says that new taxes and charges should be balanced with reductions in other levies.
Measure such as taxing child benefit with a tax credit for lower income families to offset the impact, the introduction of water charges for every house, with water meters being installed at a later date, and a carbon tax on energy use are among the 250 recommendations.
The report also proposes replacing tax reliefs for the blind and handicapped with direct payments, scrapping artists’ tax exemptions, phasing out tax relief on bin charges and trade union subscriptions, and abolishing the PRSI tax ceiling so workers would pay on all income.
Abolished
In addition, it suggests a new SSIA-type pension for the lower paid with the State contributing €1 for every €2 paid by workers, a new tax relief rate of 30pc for pension contributions and a €200,000 cap on the retirement tax-free lump sum.
Tax relief would also be abolished for those providing student accommodation in the Gaeltacht.
The property tax would initially be a self-assessed tax with home owners asked to file a tax return giving an approximate value for their property. The lower paid and the elderly would be exempt from this tax.
The Commission says the tax should raise around €1bn for the Exchequer, but does not specify at what rate it should be paid.
To raise this amount, however, would require a tax of between €600 and €1,000 on each home and the money would be used to fund local authorities.
Initially, the scheme would be done through self assessment but this system would be replaced in time with a comprehensive valuation on every house in the State.
The imposition of water charges would raise another €500m a year towards the funding for local authorities. Any new property tax should be balanced by a lowering in other taxes such as the income levy, says the Commission.
The pension provision is aimed at encouraging the lower paid to take out a pension, since up to a million workers in Ireland have no pension provision.
Difficulties
Taxes on child benefit payments could create huge logistical difficulties, so the report also recommends considering other options, such as means testing the payments.
The report is expected to go to the Department of Finance in the next few days and is likely to be discussed by the Cabinet early next month.