The Case for Introducing a Property Tax, Collected at Local Government Level

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I propose that an annual residential property tax be introduced and collected at central government for an introductory period with a view to control being handed over to local government and the revenues generated by the tax to be used solely for local publicly provided goods. But for this to be an efficient and effective method of funding local authorities and not adversely affect the balances of the exchequer there needs to be an overhaul as to how local authorities are currently funded and run. Introducing a property tax will hopefully broaden the tax base and go some way to overhauling how the tax system works in Ireland and how local authorities are funded.

Rationale for a residential property tax in Ireland

Stability

There are many reasons in support of a residential property tax. Firstly, it will provide a stable and less volatile income for the exchequer, as is the case with a transaction such as stamp duty, and generally improve macroeconomic stability. The tax income collected by stamp duty made a huge contribution to the exchequer, but as we can see from Fig 1.1, it tended to fluctuate, making it more difficult to budget long-term and susceptible to market forces, as is the case currently. A “recurring annual tax is less economically distortionary than the imposition of tax on either income or capital” (TSG 09/07) and a more reliable and stable tax income achieved from a proposed residential property tax would help with investment planning, as an “over-reliance on expenditure and transaction taxes has resulted in tax revenue dropping more quickly than (nominal) GNP” (Commission on Taxation Report 6:2.2). As we can see from the data contained in the ‘Commission on Taxation Report 2009’ (Fig 1.1), revenues from sta...

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...t such scenarios and ensure the equitable nature of the tax is maintained and “serious administration and avoidance problems arise when rates differ between jurisdictions” (McDowell 1988).

Bibliography

Research Papers

McDowell, M. 1988. University College Dublin, Department of Political Economy. Financing Local Authorities: The Questionable Viability of a Local Property Tax. Belfield, Dublin 4, Ireland.

Gurdgiev, Dr.C. 2009. Trinity College, Dublin. Macroeconomic Case for a Land Value Reform in Ireland. Dublin 2, Ireland.

Reports

Tax Strategy Group. 2009. Property Taxation. Dublin. Ireland

Commission on Taxation. 2009. Report 2009. Dublin, Ireland: Stationary Office

Online Resources

Collins, S. 2011. Property Tax Brought Forward. The Irish Times, 21st December.

Available at:

http://www.irishtimes.com/newspaper/breaking/2011/1221/breaking6.html

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