Why I'm in favour of a properly constituted property tax

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Purple

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1) A property tax, if properly constituted, provides a stable income stream for the state. My preference is a system based on the site value.

2) For those with existing mortgages it is an extra cost but for those who take out mortgages after the property tax is introduced there is no net increase in outgoings. For example; if the average home buyer can afford €1000 a month mortgage repayments and €1000 a month buys a €300’000 mortgage then the average house will cost €300’000. If the state takes €100 a month in tax then the average house will cost whatever €900 a month will buy. There is no net cost to the individual (the same applies to stamp duty by the way).

3) If a person has an income of €20’000 a month and a home worth €2’000’000 then they are rich. The fact that their assets are all tied up in their family home is irrelevant.

4) It is socially desirable that retired couples move out of large family homes and into smaller homes so that younger people with families can move into them. This stops the greying of desirable suburbs and young families being forced into the outer suburbs due to high prices caused by limited market activity.

5) Where a country cannot control interest rates it loses one of the main tools it has to control inflation and prevent the economy overheating. A property tax is a poor substitute but it’s better than nothing. Imagine if we had a property tax which was used correctly over the last two decades; no housing bubble, no rampant wage inflation caused by the construction boom, a much reduced loss of competitiveness and flows of capital into wealth and export generating sectors of the economy rather than a speculative and damaging bubble.
 
In response to your points Purple, why I'm NOT in favour of a property tax:

1> If properly constituted? I think this is enough said here.

2> For those with existing mortgages it's an extra cost and for those with new mortgages it's an extra cost. I don't follow your logic. Also, it's an extra cost for homeowners who don't have a mortgage. This will exceed the life of your mortgage, so this point doesn't make much sense.

3> "If a person has an income of €20’000 a month and a home worth €2’000’000 then they are rich." This is a pretty naive statement. What if they have a mortgage of €8,000,000? Or have multiple debts to the value of 10's of millions. Are they still rich?

4> If it is socially desirable, then what's stopping it from happening naturally? Why charge people for the privilege?

5> A property tax to control inflation? This can surely only work to curb inflation, how can applying this tax stimulate spending? I don't think this is a feasible reason for introducing property tax.
 
My issue is a lot of people paid huge stamp duty, I think I paid about 19k for a site at the peak of the boom i did this on the understanding there was no property tax so felt it was valid, on top of this I paid 4k local development tax to the council to be allowed to build. (I put in water, sewage, electric and road) I loaned money to pay for this which i will be paying back over the next 34 years.


this seems like double taxation.

I would hope they would work it along the lines of you owe for example €xxx per year but i get a credit of say 21k on the property, then I have to pick up paying the tax once this runs out, or get a 50% discount off the tax for 50 years.

I also believe it should be a tax on the person living there not on the owners or it will hold back the property market.
 
Sorry but I don't believe anyone who says that they were happy paying stamp duty at the time of their purchase because there was no property tax in place at the time.

This whole thing that I paid stamp duty somehow exempting you from having to pay a property tax or household charge is just rubbish, we're not in kansas anymore Toto.
 
1>If properly constituted? I think this is enough said here.
Why?

For those with existing mortgages it's an extra cost and for those with new mortgages it's an extra cost. I don't follow your logic.
The state takes a cut of what the market will stand. If the tax wasn’t there then the price will be higher.

Also, it's an extra cost for homeowners who don't have a mortgage. This will exceed the life of your mortgage, so this point doesn't make much sense.
That’s a different issue and I take your point.

3> "If a person has an income of €20’000 a month and a home worth €2’000’000 then they are rich." This is a pretty naive statement. What if they have a mortgage of €8,000,000? Or have multiple debts to the value of 10's of millions. Are they still rich?
If someone has 10’s of millions of debt they’ve no business owning a house worth €8 million.

4> If it is socially desirable, then what's stopping it from happening naturally? Why charge people for the privilege?
It happens anyway but it takes longer.

5> A property tax to control inflation? This can surely only work to curb inflation, how can applying this tax stimulate spending? I don't think this is a feasible reason for introducing property tax.
This tax has nothing to do with stimulating spending. The €20 billion we borrow each year to pay welfare and state employees does that.
 
My issue is a lot of people paid huge stamp duty, I think I paid about 19k for a site at the peak of the boom i did this on the understanding there was no property tax so felt it was valid, on top of this I paid 4k local development tax to the council to be allowed to build. (I put in water, sewage, electric and road) I loaned money to pay for this which i will be paying back over the next 34 years.


this seems like double taxation.

I would hope they would work it along the lines of you owe for example €xxx per year but i get a credit of say 21k on the property, then I have to pick up paying the tax once this runs out, or get a 50% discount off the tax for 50 years.

I also believe it should be a tax on the person living there not on the owners or it will hold back the property market.
I paid far more than that. If I hadn't paid it in stamp duty then my house would have cost more and I would have paid it to the seller. The price is set by the funds available to prospective purchasers. If the state takes some and the seller takes the rest there's no net loss to the buyer.
Would you feel better if the seller paid the stamp duty and you could feel you didn’t pay any? Of course you wouldn’t because you’re not stupid; you know that you paid the market rate for your house, it just so happened that the state took a percentage of that market rate and the seller took the rest.

I also agree that the tax should be on the occupant, not the owner but not because it will hold back the property market as low property prices are a good thing in the economy.
 
Hi Purple
Does it not occur to you that the reason most people are against the tax is because they do not have the money to pay for it .
With all the extra taxes most working people have very little left after paying bills
dont even get me started on what it cost to send a child back to school and to drive to work.

This should have being brought in 10 years ago not when the country is broke and no one can afford to pay it . Do you know a lot of families are on the brink and this charge will tip them over
also who is going to be doing the valuations on all these houses considering 1 million have registered and the tax is coming on stream in Jan 13 they must have a little army of valuers on standby to get it done by that date .
It has to be done by individual houses because each house on a estate would have a different value if the money is going to the local authority then everyone should pay including council house owners i am sure the majority of them have some form of employment .
It should have being called a rates charge then everyone would have to pay not just the homeowner .
 
I pay management fees. My estate is privately maintained with no local council input.

My apartment is in negative equity. I cannot sell it as the bank would not allow it.

If I had known that there would be property tax on top of management fees it would have stopped me from buying because it wouldnt have been affordable. But now I cant sell. I am effectively trapped. So I do not want a property tax.
 
If someone has 10’s of millions of debt they’ve no business owning a house worth €8 million.


It was an extreme example , but what about all the people who have houses worth €200k and mortgages of €300k.
 
Why not just keep stamp duty? Everyone knows exactly what they're getting into when deciding to buy (so it's affordable by definition) and higher rates can be applied to luxury property,as in the past.

The 'steady source of income' argument is lazy. It assumes that we are powerless to avoid, or at the very least plan for, massive booms and busts in the future.

Stamp duty worked in so far as it could in the boom. Hikes in average house prices pushed average stamp duty rates through the roof. Massive revenues were collected allowing the government run budget surpluses and salt away money in the national pensions reserve. If the tsunami of credit hadn't been of such an outrageous magnitude, the old stamp duty system would have actually helped avoid a property bubble.
 
Hi Purple
Does it not occur to you that the reason most people are against the tax is because they do not have the money to pay for it .
With all the extra taxes most working people have very little left after paying bills
dont even get me started on what it cost to send a child back to school and to drive to work.

This should have being brought in 10 years ago not when the country is broke and no one can afford to pay it . Do you know a lot of families are on the brink and this charge will tip them over
Taxes aren't optional and don't take individual affordability into consideration. There will undoubtedly be tax rises and social welfare cuts in the December budget (well more than €100 per annum per person) but there is no scope to stick your hand up and say 'I'm afraid this is not affordable for me so I think I'll opt out'. The government is spending more than it takes in so it either has to raise more income (taxes) or cut spending - if people can't afford to pay more taxes as you say, spending will have to be drastically cut.

Too many people HAVE paid the property tax for the government to abandon efforts to (eventually) make everyone pay what they owe. Individuals deciding unilaterally to not pay just increases the costs of collection which means that even more tax has to collected somewhere to pay for the extra collection costs...
 
Taxes aren't optional and don't take individual affordability into consideration. There will undoubtedly be tax rises and social welfare cuts in the December budget (well more than €100 per annum per person) but there is no scope to stick your hand up and say 'I'm afraid this is not affordable for me so I think I'll opt out'. The government is spending more than it takes in so it either has to raise more income (taxes) or cut spending - if people can't afford to pay more taxes as you say, spending will have to be drastically cut.

A property tax is optional. Unless you are in negative equity and are trapped in your property. No one has to own a property. People cant afford more taxes.

I do not want a property tax. I cannot sell my property due to negative equity. What do you suggest I do?
 
Hi Purple
Does it not occur to you that the reason most people are against the tax is because they do not have the money to pay for it .
Yes, but reductions in tax credits, increases in income tax, increases in other direct taxes etc have the same effect. The alternative is reductions in services or (the most sensible option) reductions in pay for state employees with the corresponding reductions in pensions for former state employees.

With all the extra taxes most working people have very little left after paying bills
dont even get me started on what it cost to send a child back to school and to drive to work.
That’s a different issue.

This should have being brought in 10 years ago not when the country is broke and no one can afford to pay it .
I agree but better late than never.

Do you know a lot of families are on the brink and this charge will tip them over
Yes but what’s the alternative? We already have the highest rate of marginal income tax in Europe and just about the highest VAT rate.

also who is going to be doing the valuations on all these houses considering 1 million have registered and the tax is coming on stream in Jan 13 they must have a little army of valuers on standby to get it done by that date .
It has to be done by individual houses because each house on a estate would have a different value if the money is going to the local authority then everyone should pay including council house owners i am sure the majority of them have some form of employment .
I agree on the valuations issue, that’s why a site value is better and fairer.

It should have being called a rates charge then everyone would have to pay not just the homeowner .
I agree.
 
If they take a property tax out of my wages I will find it hard to cover my mortgage!
 
If they take a property tax out of my wages I will find it hard to cover my mortgage!

When they take income tax out of mine I'm in the same boat.
I probably shouldn't have bought the house I have but that's my own fault.
 
I wouldn't have a problem with spreading the cost of a property tax over 12 months and if it's taken at source all the better.

My main worry is how the value of my home will be calculated. When I had to job of selling my late mothers properties I got massive differences in valuation (70K) between estate agents. In the end all of them were incorrect and we had to accept an offer of 15K below the minimum valuation.

Will the tax be the actual market value or what revenue feel is the current value?

Will I be taxed more if I try to improve my lot - insulation / new windows / tidy garden?

If so, I will have to weigh up any improvements against an additional tax liability.

I don't have a problem with a fair (or as fair as you can get) property tax. But this has all the hallmarks of being implemented in a ham fisted manner.

One other thing, my CC will not take over my estate leaving the residents with an average management fee of e500. I don't know if this will be taken into account or not.
 
Hi purple

So because you worked hard and saved every penny you had to buy your house and did not go cap in hand to the council looking for them to house you its your fault.
Thats nonsense, the government are squeezing the life out of the taxpayer and the homeowner and just because its not coming out in income tax its still 300 or 500 euros less that will not be spent in the economy .

If the revenue are collecting it, it might as well be more tax coming out of your wages . Realistically 1.6 million home owners are funding the countries council costs and the rest pay nothing and enjoy the benefits .
 
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Hi purple

So because you worked hard and saved every penny you had to buy your house and did not go cap in hand to the council looking for them to house you its your fault.
If I live too close to the limit of my means then it is my fault.
 
If I live too close to the limit of my means then it is my fault.

I used to think this. Then I lost my job, my husband lost his job, my property devalued by 100,000 euro - none of these things were through any fault of my own you understand. Id like to sell my property and as such, improve my means. But I cant. The bank wont let me.
 
At the end of the day the government made a complete hash of this now they are sending out different scenarios on how it will be put in place hoping that one scenario will sit well with people .
They are a shower of bumbling buffons that are not capable of running a small country . I really despair .
 
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