Thursday 24 January 2013

Property Tax – Why Dubliners Should Pay More

Frank Convery's blog post here cuts straight to the point as to why Dubliners should pay more:
 “The reason Dublin house prices are higher than Tipperary house prices is in part because of the greater benefits created there by society.”

Simply put, this is the difference in site values.

What is not justified about the new tax, however, is why homeowners across the country must pay more for improvements they make to their properties. 

Frank Convery is Chairman of as well as of the UCD Earth Institute.

Read his post below: 

Property Tax – Why Dubliners Should Pay More

Written by Frank Convery on .

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.


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: for property prices, and 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: for property prices, and 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.


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.


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.


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.


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.
[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:
[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 Property will be valued in early 2013, and this value will apply from 2013 to 2016

Thursday 17 January 2013

Green Party Environment Spokesperson points out a strong contradiction in the government's choice of property tax

Cllr Malcolm Noonan

The Green Party Environment Spokesperson pointed out a strong contradiction in the government's choice of property tax, reported on Tuesday here in the Kilkenny People:

Green Party Environment Spokesperson, Cllr. Malcolm Noonan said today: “The Fine Gael TDs in urban areas are right to point out the fundamental unfairness of the property tax that is being introduced. They can back up that talk by supporting the Green Party proposal for a site value tax which provides a credible and fairer alternative to what is being introduced.”

The Kilkenny Borough and County Councillor added “By doing so, they would be backing their own Programme for Government which favoured a site value tax, and which was abandoned without any proper analysis or explanation from either Government party over the last two years,” he continued.

“Minister Phil Hogan cannot hide the fundamental contradiction in his approach. Within the one breath this morning he said that whatever money was collected locally would be spent locally, and at the same time that urban areas are going to have to pay up for the rest of the country. His only argument in support of the value based property tax was that the Government had decided upon it.”

“We hope that the members of the Government parties looking for a change on this unfair and inefficient form of property tax will join us in calling for a switch to the better and more sustainable alternative. They wouldn’t even have to call it a U-turn, it would just be going back to what they promised in the first place,” concluded Cllr. Noonan, a former Mayor of Kilkenny city.

Wednesday 16 January 2013

Tom Dunne's Tax Facts

Tom Dunne wrote an interesting article here in the Surveyors Journal.

Konrad Dechant of Smart Taxes wrote the following comments:

There is indeed a real need to clarify the concepts involved when debating the principles of a property tax. The point you made about the 'important distinction between land and other forms of property' strikes me as particularly relevant in the debate. And I also wish that when you write land is part of providence and exists regardless of man would really be taken seriously by us all. In the Sovereign People Pearse insists that A nation may, for instance, determine as the free Irish nation determined and enforced for many centuries, that private ownership shall not exist in land; that the whole of the nations's soil is the public property of the nation...
Perhaps this may be dismissed as too 'philosophical', but when clarity is required it may be a good basis to start from. I appreciate that the aim of your article was clarification of concepts and not to judge the merits of one concepts over another. When you refer to the fact that classical economists saw land as being different to other forms of property, having particular characteristics that made it intensely appealing as a subject of tax, would I be right in thinking that they found it appealing because they acknowledged a principle here. If that is the case it is reasonable to conclude that taxing the value of houses is arbitrary, which in turn must lead to many unwanted consequences. I think you say this more elegantly in the conclusion of your paper.
Reading your article in the context of clarity reminded me to recognize afresh that a Land/Site Value tax must be universal; it must include agricultural land to determine the full land value pool of the country (even if agricultural land is rated zero for the time being).
Who is to answer the very pertinent question in your article: Is the property tax a form of wealth tax or is it a charge for services? Emer O'Siochru answers this categorically:
Site Value Tax is not a 'charge for services' but a tax on the 'locational value' of the site relative to nearby services, infrastructure and amenities either existing or promised by designation.

See Dunnes article here:
Tax facts

Volume 2, Issue 4, Winter 2012  

The debate about property taxes can be intense and often this is due to a lack of clarity about the concepts involved, not to mention the exact meaning of terms used. Such lack of clarity is always a recipe for unhelpful confusion and heat. To assist discussions after the budget, it is worth trying to get some precision about the nature of property, the character of property taxes and the language used.

Charges and taxes
First, let us start by saying something that appears obvious but is worth making clear. A tax is a compulsory payment to the State and there is no legal choice about paying it. Other words can be used and frequently are but, essentially, if it is paid to the State and is compulsory, it is a tax. There is a useful distinction between a payment made without reference to specific benefits or services, and compulsory payments for particular services received by the taxpayer. The latter are called hypothecated taxes and could be called charges rather than taxes. That distinction can be blurred and often is, but it helps to keep it in mind when discussing property taxes. Many of the services provided by local government can be identified and costed, and a property owner given a clear indication of what they are being charged for. To the extent that this is done a local property tax can be seen more as a charge than a tax. The major reason for levying local property taxes is precisely because doing so is regarded as the best means of distributing the burden of the provision of many of the services of local government among those who benefit. If houses are to be taxed to pay for unspecified services, and this includes a subsidy to other households, then it may be more a tax on one specific form of wealth, begging the question: why is a wealth tax only being applied to houses and not to other forms of property?
The word ‘property’ can simply mean anything that is owned, but is often taken to denote the more specific case of landed
property. All property is of course a form of wealth, but there is an important distinction between land and other forms of property. Land is part of providence and exists regardless of man. Other forms of property were created by man and exist in the
form of capital or wealth, and may be physical, but not necessarily so. Using this distinction, a house, for example, can
be seen as an amalgam of two factors: capital, i.e., the bricks and mortar etc., and the land on which it sits. In this conceptualisation a house is one property made up of two elements: land and
Landed property is different
Classical economists saw land as being different to other forms of property, having particular characteristics that made it intensely appealing as a subject of tax. For example, land cannot be hidden,
with a consequence that land taxes cannot be avoided, a particularly attractive characteristic. Most important, economic theory holds that taxes on land do not distort economic activity, unlike labour taxes for example. Because of these most economists find the arguments for taxing landed property compelling and this reasoning is the basis of the appeal of land and site value taxes, which attempt to separate out the land element of landed property. But it is not as simple as that. In many discussions about economics and tax, land is often conflated with capital, and reflecting this, most of us see land and buildings as forming one piece of property. Importantly, many of the strong arguments for taxing land do not apply as firmly to taxing the whole property. A lot depends on the relativity of the site value to the value of the whole property. In many locations, particularly at times when economic activity is depressed, all the value might be in the buildings and the value of the site might be nominal and little above agricultural value. It is clear that a tax on property can have a disincentive effect, which does not exist if the land value element only is taxed. This is most clearly seen in the argument that property taxes deter people from improving their homes, which would not be valid if only the site was taxed. In some jurisdictions this problem is accommodated somewhat by having what is called a split-rate tax, where a separate assessment is made on the land and buildings and the rate of tax applied to each would reflect the distinction. Landed property is indeed different, and while there are compelling arguments for taxing wealth held in this form, isolating the land element can be complex. If it is intended to tax wealth, then landed property should certainly be included, but separate from that there is a strong case for using property taxes as a tool for recouping discretionary spending by local authorities, and clarity about intentions would greatly help the design of the tax and how and who should pay.

Who should pay – owner or occupier?
This depends on what the tax is intended to be. Is the property tax a form of wealth tax or is it a charge for services? If it is a wealth tax the owner should pay, and if it is a charge for services then the occupier should pay. Adding to the complexity is the extent to which the services of local authorities benefit the property or the occupants. Some services will clearly benefit the property and others the occupants. A lack of clarity around these issues leads to design flaws in the tax, but solutions to this question can be found. For example, in France there are two property taxes, one paid by the occupier and the second by the owner. In simple terms the occupier tax could pay for local services from which occupiers benefit and the owners pay the tax for services provided to the property. In the case of rented property it would seem correct for the landlord to pay if the property tax was intended as a wealth tax, but if it is a payment for services the tenant should pay. There is in addition the thorny question of mortgages. Again it can be said that if the property tax is a payment for services, the mortgage is not relevant as the
services are provided to the occupants regardless of their ownership status. To the extent that it is intended as a wealth tax
an allowance should be made for this. Clarity in thinking about the purpose of a property tax will help to determine the basis for the tax and the way it is to be paid. A lack of clarity will lead to confusion and design flaws, which make justifying the tax much
more difficult and may prove fatal.

Local or central collection
The Government has suggested that a property tax would be collected centrally, but ring-fenced and applied to funding local
government, implying that such a tax is a form of local property tax. Indeed it has been suggested that in future local authorities
could have some discretion to vary the rate of tax in their local area. If it is intended to be truly a payment for local services, the
logic follows that these should be specifically identified and the tax paid in accordance with the cost of these, as happens in most other countries. In truth, without local discretion about spending, a national tax on residential property could be seen as a hypothecated wealth tax used to garner central funds to be spent on local government. This is a very long way from a local property tax, but could be justified as a form of wealth tax. But that would beg the question: why is the landed wealth held in houses taxed in this way and not wealth held in the form of, say, agricultural land? Local collection of a local
discretionary tax avoids many of these issues, and particularly the problem that property values in some areas are higher than in others. It is the relativities in a local area that should count.

Relative value within a local area is important
Normally with local property taxes the imperative is to distribute the cost of provision equitably among the beneficiaries from the
services. This is done by a charge to each property or household specifying the liability for a share based on some aspect of the property occupied. Normally this will be rental or capital value, but it does not have to be. It can be the size in terms of floor area or indeed the site area in towns and cities. Here the important issue to grasp is that what is at stake is not the actual size or value of each house, but the relativities involved. The objective is to distribute the cost of services as equitably as possible.
Given that it is only the expenditure of the local area that is being recouped, it does not matter much that property values in one part of a country are higher than in another; what matters is the relativities within the local authority area. Conceivably, for a given basket of local authority services, a property tax based on value could be lower per property in a wealthy local authority area than in a less wealthy area, as the cost of provision or uptake of the services might be lower in the wealthy area. For example, if a local authority in a less wealthy area provided a swimming pool and the authority in a wealthy area did not (because all residents had one in their back garden) then, all other things being equal, the property tax in the less well off area would be higher and the householders happy with their amenity and willing to pay for it, while those in the wealthier area each pay much more for their own pool. Many of the objections to property taxes fall away if they are seen as an equitable tool for paying for local services.

Many of the arguments that are made against property taxes should be seen as being against a particular model of property tax
rather than arguments against property taxes as such. There are plenty of examples of property tax systems around the world where acceptable taxes are levied and local government works better than it does in Ireland. The system chosen here will have many deficiencies and maybe they will be fatal. These should be seen as resulting from a lack of clarity about the purpose of the tax other than the crude need to collect money from taxpayers. It is possible to have a fair and equitable property tax, but clarity of purpose would help in designing it. The debates following the budget will reveal if we have managed to devise an equitable property tax or whether the model chosen yet again will contain the seeds of its own downfall.

Tom Dunne
Tom is Head of the School of Real Estate and
Construction Economics, DIT.

Wednesday 12 December 2012

Government ignores recommendation by the Thornhill report to include all zoned land in the new property Tax

The Thornhill report into the structure of Property Tax, which has been held outside the public domain until now, is finally published and it has revealed that that the government decided to ignore Dr Thornhill’s suggestion to impose a recurrent tax on development and zoned land. The government decided to forgo taxing €5 billion worth of property from the 250,000 hectors of empty zoned land. Why? If the government had taken their own advice and gone for a Site Value Tax, which was to include all zoned land, instead of this market value, residential, property Tax they would have saved householders on average 30% of the cost. A property tax bill, which is 30% less, would have allowed people who bought at the peak of the boom and who paid massive stamp duty, some small relief from the chronic austerity that they face.
The report reads “The Group notes the recommendation of the 2009 Commission on Taxation for a recurrent tax on zoned development land and suggests consideration be given to the proposal with a view to supporting proper long term planning and sustainable development.”
Why ignore this suggestion? The omission is in effect a method of taking money out of the pockets of Irish house holders and putting it back into the pockets of the very property developers and speculators whose actions caused the property and banking collapse in the first place.
The Thornhill report saw a perfect opportunity to broaden the tax base and share the tax burden with speculators.  This is perhaps why the Thornhill report has been so top secret. The government have been supporting developers and speculators including NAMA while putting householders under intolerable pressure. It’s clear that the government withheld this report until it was too late for any real discussion on the issue. When NAMA took all these properties onto their books there is no doubt that their valuations would have included provision for the Governments proposed property tax. To let them off the hook now is beyond comprehension.

 For more information see and and read ‘The Fair Tax’  available from Amazon, any good bookshop and


Constantin Gurdgiev 087 6164227

Ronan Lyons 086 6045655

Judy Osborne 086 3699575

Emer Ó Siochrú 01 4972564 & 0868267555

Wednesday 5 December 2012

Response to Budget for 2013

Response to Budget for 2013 SMART TAXES NETWORK


The government has gambled on the ignorance of the Irish people and imposed a grievously unfair, anti-job, anti-urban and uncollectable Property Tax in the Budget for 2013. 
It is grievously unfair because it has exempted the owners of zoned land and development sites from paying the Site Value Tax originally planned so that now all the tax will be raised on homeowners alone. 
Zoned land and development sites represent approximately 1/3rd of potential receipts.  If homeowners pay €.5 billion as the government plans, then developers, speculators and banks are getting a €.25 billion write off every year.  Capitalised this represents up to a  €5 billion ‘dig out’ given to the very people that caused the crisis. 
The ‘Mansion Tax’ does not redress this decision because it will raise a derisory fraction of the sum foregone on development land and sites. It will not be enough to reduce Property Tax on the many distressed boom-time buyers who will be forced to pay the full tax  - if not now when they sell.  
A Site Value Tax would have raised enough revenue to give these families a fairer deal.  

“Why has the government ignored all reasoned and moral arguments for a Site Value Tax? What answer can there be except that it feared that it would depress the value of land and sites held by NAMA, the pillar banks and the loans held by PRBA. This reduction in value should have been taken into account by any competent valuer at the time of transfer as Site Value Tax was in the Programme for Government at the time. Imposing a Property Tax instead is nothing less than another bail-out of developers, speculators and banks at taxpayers expense.” 

Says Emer Ó Siochrú Architect and Development and Planning Valuer and member of the Smart Taxes Network (01 4972564 & 0868267555)

The Property Tax and Mansion Tax are taxes on jobs in the construction sector because the tax will rise as the value of a home is increased by energy saving upgrades and extensions. The fact that valuation bands will be fixed for three years will not redress this damaging disincentive.  Energy upgrades that give significant Green House Gas reductions are costly and most such upgrades include further remodelling and extensions that easily breach the €50k band thresholds. This is exactly the area of work in which many good architects and builders have recently developed significant expertise – now undermined. 

The Property Tax hits apartment owners far harder than a Site Value Tax as it is shared amongst many apartment owners on the same site.  As most apartments are located in the cities particularly Dublin, Property Tax is fundamentally anti-urban.  The Mansion Tax compounds this effect as the highest valuedhomes are located in Dublin although by far the largest homes are located in the open countryside. 

The Property Tax will be very difficult to assess and collect because it is based entirely on self assessment of the current market value of the home.  There are many more variations in homes than there are of locations – size, age, quality and energy efficiency all have to be taken into account. The current market has very few transactions on which to make basic comparisons and of those transactions, very few are in rural locations where every house is typically unique.

The current market is also misleading because it is not normal for 40% of purchasers to be cash buyers as is the case at present.  This is sure signal that the banks are not prepared to lend sufficient money against the incomes of average couples to buy at current prices.  On the other hand, the banks including NAMA and the IBRC have distorted the normal resolution of a property bubble by their policies of forbearance for political and self-interested financial reasons. Their actions have artificially put a floor under housing prices unlike the US which saw precipitous falls, repossessions and finally a rebound from a very low level into a predictable functioning market.

Homeowners will also have to calculate the reduction in value that the imposition of an annual Property Tax will cause, also taking into account the value of the concession offered to buyers in the current year. Under these circumstances at this time, it is problematic for a trained valuer to confidently estimate the value of anyone’s home - or for a government to confidently demand payment.  

In contrast Site Value Tax is based on the market price of the site over a significant time period and double checked against capitalised rental values for the same property. The relative differences in value of sites due to natural and public amenities are then established and an objective map developed that gives a value per m2 for each site.  The homeowner then only has to double check that there are no circumstances that might make their particular site more or less valuable than those in the same street or near area.  Comparisons of sites is much easier than for completed homes. This ease of valuation and collection is demonstrated by the experience of Denmark and the Australian Capital Territories where their Site Value Tax costs a tiny 2% of revenue to collect with the few appeals.

For more information see  SVT twitter and and read ‘The Fair Tax’  available from Amazon, any good bookshop and


Constantin Gurdgiev 087 6164227

Ronan Lyons 0866045655

Judy Osborne 086 3699575

Emer Ó Siochrú 01 4972564 & 0868267555