Tuesday, March 27, 2012

The household charge

The household charge of €100 was introduced in the last budget as an intermediary step towards a property/council tax being introduced in the coming years. Based on there being about 1.5M houses in Ireland, some of which will be eligible for waivers, the measure will bring in about €100M or so in this year. That is, if everybody pays it and that is looking less and less likely.
What is surprising is the massive campaign against the household charge, while hundreds of other measures that have had a much greater impact (USC, Tax Credits, Social Welfare payments, health and education cuts) have been accepted fairly easily. One of the biggest scams of all was the setting up of NAMA and only about 400 people turned out at the rally against it.
What is even more surprising is that it is the left groups who are objecting most strongly. One of the key ideals of socialism is taxation of assets and wealth rather than labour. So how can people like Joe Higgins and Richard Boyd Barrett honestly stand up and say the household charge is bad? Sure, in its current form as a flat charge it is not equitable, but they are arguing against charges on property as a whole. "No tax on the family home" seems to be the mantra. But if most houses in Ireland are family homes then any property tax will not be deemed acceptable to them which flies in the face of socialism.
This is similar to the problem I have with the anti bin-tax campaign. Due to it's "success" Dublin City Council ended up having to privatise the service and we're now left with the mess of Greyhound not doing the job properly. Parties of the left should be in favour of proper public services, but that campaign ended up displacing quality jobs in the council into poorer conditions with a private operator. And I don't see the SWP or SP orchestrating campaigns against payments to Greyhound and Panda now that the easy target of the City Council has been defeated.
Another current red herring is the exemption for property owned by Ministers. Like lots of other legislation, the state is exempted from paying itself taxes as it just turns into an accounting exercise. These properties are things like social housing, hospitals and army barracks. Personal, private residences owned by people who happen to be Ministers are just as liable for the charge as every other home.
One thing that I am not sure about is whether NAMA will have to pay the household charge on all the residential properties it has sitting on its books. While NAMA is effectively a state agency, it was set up with only 49% state ownership to avoid various issues surrounding state support and also to dodge the FOI act. Will the charge eat into any potential profits or will it just increase the losses incurred NAMA which then have to be born by the tax payer anyway?
To me it's simple - a property tax (site based or house based) is a good thing in that it provides a sustainable and almost guaranteed income stream either to local or central government. The alternative, if property taxes are ditched, is to increase income tax across the board (but mainly in the soft middle 50-80k territory) or cut spending in health, education and welfare. As a Labour person, I'm enjoying seeing Phil Hogan make an eejit of himself and having to hide behind Fergus O'Dowd. I'm also somewhat cynical that the closing date for the charge just happens to coincide with the €3.1B card monte. However, if property taxes are good enough for every other western country then they're good enough for Ireland too.


  1. As I am renting at the moment I'm outside the tax net on this charge (although I'm sure my Landlord will attempt to increase rent due to this) what I'm sensing from people I've talked to is that they no longer trust the government to allocate funds to where the tax payer thinks it should be going... for example Local Authority Services rather then into the Anglo black hole... Personally I think this concern is 10 to 12 years too late, we should have been thinking about this when we had money rather than let Government to throw at problems which we now still have.

    How do you think this will,or if it will effect the upcoming referendum?

  2. Did you pay it?