The Local Property Tax (LPT) should be significantly increased, with a simultaneous adoption of a deferral system for those who are “asset-rich and income-poor”, an Oireachtas committee has heard.
Both the Nevin Economic Research Institute (NERI) and UCD economist Dr Micheál Collins agreed the LPT system should be not just retained, but increased.
They were commenting on the recently-published Commission on Taxation and Welfare report, aspects of which were under review by the Committee on Budgetary Oversight on Wednesday night.
The report looks at how the Irish taxation and welfare system could be reformed to best support economic activity, covering a broad range of taxation areas. It recommends the “well-functioning” LPT system be increased.
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NERI co-director Dr Tom McDonnell said his organisation agreed with the Commission that taxation should shift towards land and property.
This should include, he said, a significant increase in LPT which should be made progressive and contain surcharges for vacancy and non-principal private residences.
“At the same time, we must be cognisant of asset-rich and income-poor situations,” he said in his submission to the committee.
“The best way to resolve this problem is through a generous deferment system. The deferred amount, along with interest, would only be payable on the sale or transfer of the property. This resolves the hardship issue and simultaneously protects government revenue over the long term.”
Similar views were extended by Dr Collins, an assistant professor of social policy at UCD, who said it should be frequently rebased and increased over time.
Uncomfortable at the prospect, People Before Profit TD Richard Boyd Barrett said that while he supported the notion of taxing owners of multiple properties, he took issue with applying charges to family homes.
“I’m very keen to tax very heavily the 10 per cent who have 50 per cent of the wealth,” he said, drawing on the distribution of wealth in the county and adding that 70 per cent of people in Ireland own their own homes.
“Shouldn’t we be looking more at trying to find out who really has wealth in the proper sense of the term, as opposed to who just has a house?”
Addressing the point, Professor Martina Lawless of the Economic and Social Research Institute (ESRI) said principal private residences makes up about half of total wealth.
“If you’re talking about a wealth tax that excludes principal private residence, you’re taking out a very large part of the base for that tax,” she said. However, she noted a distinction in the concepts of property and wealth taxes.
Local authorities recently voted to reduce or increase LPT rates in their areas, a function they maintain as part of a system designed to bolster local spending.
Dr Collins said this was a valuable aspect of the system. “One of the important roles of the Local Property Tax is to make that link much more explicit, so that councils, councillors and individuals living in areas have a much more collective link to the governance and running of those areas,” he said.
