New Dail / New Taoiseach

Sam Russell · 06-03-2020 3:01pm

efanton wrote: »

Sorry, I missunderstood you when you said

I just dont see the point of an property tax if you are going to make exceptions for genuine cases of hardship. As you have already agreed income taxes tend to be progressive so why not just transfer the cost to that.

The argument about it widening the tax band really doesnt work if you are considering family homes. I can understand that argument being used for investment properties, where someone could divest themselves of a property when the economy is not doing well or there is a property crash, but it makes little sense for properties that are primary residences. After all if you only own one property you are hardly going to make yourself homeless to avoid a tax.

I suppose a compromise might work where only commercial properties and any additional residential properties that are owned are liable for a property tax but the primary home is taxed through income tax.

Not everyone who owns a property is liable for income tax.

Hardship does not necessarily mean reducing the tax. It cold just mean delaying the tax as at present. The tax becomes a charge on the estate.

Commercial properties already pay rates, which is a property tax.

I think your objections are political - that is a policy choice, not an economic one. The LPT would remain as a tax liability whether there is a property crash or not. That is one of the points about it - it s not subject to the vagaries of economic activity. Now the tax could be on the net value - that is value minus outstanding mortgage. That might make it more equitable.

efanton · 06-03-2020 3:30pm

Sam Russell wrote: »

Not everyone who owns a property is liable for income tax.

Hardship does not necessarily mean reducing the tax. It cold just mean delaying the tax as at present. The tax becomes a charge on the estate.

Commercial properties already pay rates, which is a property tax.

I think your objections are political - that is a policy choice, not an economic one. The LPT would remain as a tax liability whether there is a property crash or not. That is one of the points about it - it s not subject to the vagaries of economic activity. Now the tax could be on the net value - that is value minus outstanding mortgage. That might make it more equitable.

But if they are not liable for income tax, how will they in a position to find the money for LPT.

Hardship does not necessarily mean reducing the tax. It cold just mean delaying the tax as at present. The tax becomes a charge on the estate.

How is that going to work. The elderly die off, and then you evict the sons and daughter currently living in the house in order to collect the arrears?

Its not a political ideology that drives my argument, its simply practicality and fairness.

Chips Lovell · 06-03-2020 3:50pm

Nobody gets evicted if they can't afford to pay LPT. If someone who has deferred payment dies, the person who inherited the house has the option of a.) clearing the bill themselves, b.) selling the house and clearing it from the proceeds, or c.) deferring it too until they are in a position to pay.

Either way, they're not doing too badly. They've inherited a very valuable asset, something most people have to spend 20 odd years paying for.

efanton · 06-03-2020 4:01pm

Chips Lovell wrote: »

Nobody gets evicted if they can't afford to pay LPT. If someone who has deferred payment dies, the person who inherited the house has the option of a.) clearing the bill themselves, b.) selling the house and clearing it from the proceeds, or c.) deferring it too until they are in a position to pay.

Either way, they're not doing too badly. They've inherited a very valuable asset, something most people have to spend 20 odd years paying for.

But if you are going to have generations of one family paying no LPT whats the point?
You are not widening the tax base, you are not collecting any revenue, and it would be so much simpler to simply have the family home taxed as part of income tax. In the mean time everyone else has to pick up the cost of the shortfall.

I can see the argument for investment properties or landlords being charged for LPT (which they will immediately pass cost on to their tenants), but even then it might be simpler to simply tax them on income as well. After all it was their income that allowed them to invest in property.

I just do not get this fixation with this widening the tax base argument when it makes no sense. Family homes are not a productive asset, they produce no profit or revenue. If there was second home, or additional property then yes it makes sense for property taxes then. If they cant afford the taxes, the they can simply divest themselves of that property.

Johnboy1951 · 06-03-2020 4:06pm

LPT, deferred or not, is neither fair nor equitable.

If you are going to apply tax on property then do it for ALL property, not just homes, or none.

If in need of extra funding then tax wealth when it is generated, not after it has been taxed and spent on some possession, the purchase of which is also taxed.
..... income tax when generated and then VAT when spent.

I guess ye think that those who spent their wealth in a particular way (some would say wisely) should pay more tax than everyone else!

Chips Lovell · 06-03-2020 4:10pm

efanton wrote: »

But if you are going to have generations of one family paying no LPT whats the point? You are not widening the tax base, you are not collecting any revenue, and it would be so much simpler to simply have the family home taxed as part of income tax. In the mean time everyone else has to pick up the cost of the shortfall.

You may have a point if everyone was deferring or even a majority. But compliance is north of 95%. So you are widening the tax base.

Princess Consuela Bananahammock · 06-03-2020 4:12pm

Chips Lovell wrote: »

Nobody gets evicted if they can't afford to pay LPT. If someone who has deferred payment dies, the person who inherited the house has the option of a.) clearing the bill themselves, b.) selling the house and clearing it from the proceeds, or c.) deferring it too until they are in a position to pay.

So why not keep deferring it until the end of time?

Either way, they're not doing too badly. They've inherited a very valuable asset, something most people have to spend 20 odd years paying for.

They've most likely already paid tax on it when they inhetied it.

Most people will still have to pay the same tax even after the 20 odd years, and again - a mortgage is a purchase: no one obliges people to buy mortgages.

Chips Lovell · 06-03-2020 4:16pm

Princess Consuela Bananahammock wrote: »

So why not keep deferring it until the end of time?

Conceivably it's possible that every single generation of a family will qualify for a deferment until the end of time. In reality, it's extremely unlikely.

Princess Consuela Bananahammock wrote: »

..a mortgage is a purchase: no one obliges people to buy mortgages.

No, but for people not fortunate enough to inherit a house, choosing to buy a mortgage may be the only route open to them to acquire a house of their own.

Princess Consuela Bananahammock · 06-03-2020 4:20pm

Chips Lovell wrote: »

Conceivably it's possible that every single generation of a family will qualify for a deferment until the end of time. In reality, it's extremely unlikely.

No, but for people not fortunate enough to inherit a house, choosing to buy a mortgage may be the only route open to them to acquire a house of their own.

Again - acquisition of a house is a choice. It's not the end goal. If it is, why strive for it when you ultimately wind up paying tax on it you dont have the income for?

Again - it;s not a liquidable asset. You're assume "wealth" automatically means disposable income. No one seems to want to admit that.

Nor have you delt with the issue of inheritance tax. Regarldess of how you come into poessession of it, you've already paid tax on it.

Chips Lovell · 06-03-2020 4:32pm

I think you're confusing a few things here. Wealth does not translate to disposable income. But, if all other things are equal, you cannot deny that someone who owns an unencumbered house is wealthier than someone who owns no house or someone who owns an encumbered house.

Secondly, we have a fairly generous tax regime for inherited wealth in this country. For example, you can inherit assets up to €335,000 tax free. It's only once you exceed that threshold that you're liable for CAT at 33%.

Thirdly, it's never been the case that paying one form of tax on an asset or income doesn't absolve you from other taxes. If you pay income tax on your salary, and you'll still pay more taxes when you spend it, such as VAT, excise etc.

Princess Consuela Bananahammock · 06-03-2020 4:40pm

Chips Lovell wrote: »

I think you're confusing a few things here. Wealth does not translate to disposable income. But, if all other things are equal, you cannot deny that someone who owns an unencumbered house is wealthier than someone who owns no house or someone who owns an encumbered house.

Emmm.... that's exactly my point...?

People are assumng that wealth via home ownership automatically means disposable income which can be taxed. I'm saying it's a fallacy.

Secondly, we have a fairly generous tax regime for inherited wealth in this country. For example, you can inherit assets up to €335,000 tax free. It's only once you exceed that threshold that you're liable for CAT at 33%.

I think you'll find that's only from a parent. In any case, on a 400-500k house, the new owner will still be paying between 20-50k straight off the bat.

Thirdly, it's never been the case that paying one form of tax on an asset or income doesn't absolve you from other taxes. If you pay income tax on your salary, and you'll still pay more taxes when you spend it, such as VAT, excise etc.

So should people who paid off their mortgage also pay the tax? If so, what is the point in paying off a mortgage if you then have to pay tax on thw ownership?

Also, out of interest, what in your opinion would be a fair tax rate?

Sam Russell · 06-03-2020 4:44pm

efanton wrote: »

Its not a political ideology that drives my argument, its simply practicality and fairness.

hat is exactly the very definition of political ideology. What is fair to one is unfair to another. That is politics.

Chips Lovell · 06-03-2020 4:50pm

Princess Consuela Bananahammock wrote: »

People are assumng that wealth via home ownership automatically means disposable income which can be taxed. I'm saying it's a fallacy.

Nobody has said it's disposable income though. But it's not worthless either. You're incredibly privileged to own an asset like that and it's not unreasonable that you should be taxed on it.

Princess Consuela Bananahammock wrote: »

I think you'll find that's only from a parent. In any case, on a 400-500k house, the new owner will still be paying between 20-50k straight off the bat.

Are you honestly arguing against a property tax because someone fortunate enough to inherit a house valued at half a million may have had to pay €50,000 for that privilege?

Princess Consuela Bananahammock · 06-03-2020 5:00pm

Chips Lovell wrote: »

Nobody has said it's disposable income though. But it's not worthless either. You're incredibly privileged to own an asset like that and it's not unreasonable that you should be taxed on it.

If prople sare saying it's a fair tax, then people are assuming the income to pay for it. How else are they going to pay?

Are you honestly arguing against a property tax because someone fortunate enough to inherit a house valued at half a million may have had to pay €50,000 for that privilege?

I'm saying pay the 50k and continued tax on any income generated from ownership of said asset.

I'm arguing against taxation of practical useage of a posession.

Also: fair tax rate opinion, please?

Johnboy1951 · 06-03-2020 5:03pm

I would still like to hear why one section of society who spend their (tax paid) income in one particular way, should have an extra tax levied on what they buy (applied every year while they own it), while all others escape this extra tax.

Johnboy1951 · 06-03-2020 5:19pm

Originally Posted by Princess Consuela Bananahammock
People are assumng that wealth via home ownership automatically means disposable income which can be taxed. I'm saying it's a fallacy.

Chips Lovell wrote: »

Nobody has said it's disposable income though. But it's not worthless either. You're incredibly privileged to own an asset like that and it's not unreasonable that you should be taxed on it.

A privilege?
To spend earned and taxed income on a home?
What nonsense!
You think it would be better for the country if that money was instead spent on multiple holidays, new cars and extravagant imported items rather than on a home?

Some very weird views in this thread!

Are you honestly arguing against a property tax because someone fortunate enough to inherit a house valued at half a million may have had to pay €50,000 for that privilege?

Chips Lovell · 06-03-2020 5:19pm

Princess Consuela Bananahammock wrote: »

If prople sare saying it's a fair tax, then people are assuming the income to pay for it. How else are they going to pay?

You can sell let or borrow against the asset. As I said, it's not worthless.[/QUOTE]

Princess Consuela Bananahammock wrote: »

Also: fair tax rate opinion, please?

Tax rate on what? Property? inheritance?

Johnboy1951 wrote: »

I would still like to hear why one section of society who spend their (tax paid) income in one particular way, should have an extra tax levied on what they buy (applied every year while they own it), while all others escape this extra tax.

75% percent of all real household wealth is accounted for by property. if you're going to tax wealth, it's a good place to start. A further 15% is accounted for by land. I'd tax it, but most parties would balk at alienating the rural vote.

Of the remaining 10% there is a mishmash of stuff. 2.7% is vehicles for example, which are already subject to a number of taxes.

Princess Consuela Bananahammock · 06-03-2020 5:40pm

Chips Lovell wrote: »

You can sell let or borrow against the asset. As I said, it's not worthless.

So.... get a mortgage, pay off portgage, immediately sell or go istraight back into deby to tax....? Seems pointless.
Letting is assuming you have spare room - fallacy.

Again, assumption and entitlement all over the place.

Tax rate on what? Property? inheritance?

Propoerty tax!

Chips Lovell · 06-03-2020 5:49pm

Princess Consuela Bananahammock wrote: »

So.... get a mortgage, pay off portgage, immediately sell or go istraight back into pay tax....? Seems pointless.

I'd thought you were referring to inherited property. This scenario is very unlikely. The person who has paid a mortgage and then finds themselves unable to finance a property tax would more than likely defer rather than sell. You seem to be trying to come up with unlikely hypothetical scenarios rather than considering what the average real-world situation would be for most payers.

Princess Consuela Bananahammock wrote: »

Propoerty tax!

I think the current rate is fair or was fair at least. They kind of bottled it a bit by constantly deferring the revaluation date. If the were to broaden it out further, I'd prefer if they got water charges off the ground again and rethought domestic waste charges to incentivise recyling and disincentivise illegal dumping.

Princess Consuela Bananahammock · 06-03-2020 5:52pm

Chips Lovell wrote: »

I'd thought you were referring to inherited property. This scenario is very unlikely. The person who has paid a mortgage and then finds themselves unable to finance a property tax would more than likely defer rather than sell. You seem to be trying to come up with unlikely hypothetical scenarios rather than considering what the average real-world situation would be for most payers.

What difference does it make? What if someone pays off two/thirds the mortgage, then inherits cash, then uses said cash to pay off rest of it?

I'm trying to highlight scenarios to point out the fallacy here that people think wealth automatucally means finances available to pay tax. Not always the case. And I will keep doing so to highlight said fallacis. Just because you don't like to asnwer them doesn't mean they aren't relevant.

I think the current rate is fair or was fair at least. They kind of bottled it a bit by constantly deferring the revaluation date. If the were to broaden it out further, I'd prefer if they got water charges off the ground again and rethought domestic waste charges to incentivise recyling and disincentivise illegal dumping.

Gonna press you for a number on that, Chips.

Chips Lovell · 06-03-2020 6:03pm

Princess Consuela Bananahammock wrote: »

What difference does it make? What if someone pays off two/thirds the mortgage, then inherits cash, then uses said cash to pay off rest of it?

It matters because for any taxation measure, there is probably a small minority of people who are put into difficulty by it. You're essentially arguing that you should scrap a tax that is affordable to the majority, rather than address the difficulties it puts the minority into (e.g. by offering them the ability to defer).

Princess Consuela Bananahammock wrote: »

Gonna press you for a number on that, Chips.

0.18% of the current value of the house.

Princess Consuela Bananahammock · 06-03-2020 6:11pm

Chips Lovell wrote: »

It matters because for any taxation measure, there is probably a small minority of people who are put into difficulty by it. You're essentially arguing that you should scrap a tax that is affordable to the majority, rather than address the difficulties it puts the minority into (e.g. by offering them the ability to defer).

0.18% of the current value of the house.

At 0.18%, fair enough - someone was suggest 1% earlier one, then I'd accept that it's probably not going to inconvenience to most moderate homeowners.

But I'm still against the idea of someone being forced to sell off a home they live in (and may have lived in for several decades) in a neighbourhood they feel safe and comfrotable in and move away simply because someone felt that they must have extra income the taxman can have a chunk of. A lot of homeowners might be pensioners (or near to) who worked hard for their retirement and then be suddenly faced with losing it all.

Youcan differentiate between mortgage and inheritance all you like, but untimately you're making the mistake you pointed out to me earlier: thinkging wealth automatically means income and income means tax, so wealth therefore must mean tax.

Chips Lovell · 06-03-2020 6:16pm

Princess Consuela Bananahammock wrote: »

But I'm still against the idea of someone being forced to sell off a home they live in (and may have lived in for several decades) in a neighbourhood they feel safe and comfrotable in and move away simply because someone felt that they must have extra income the taxman can have a chunk of.

It's worth pointing out that property taxes have been in place for decades in other European countries and this has never been an issue.

I'm aware of people selling houses they've inherited to pay off inheritance taxes (some here but mostly in Europe) but having to sell to pay property taxes doesn't appear to be a thing.

Johnboy1951 · 06-03-2020 6:43pm

Property tax on an owner occupied home is wrong.
It should not exist.

Certainly when someone inherits it, then they gain, and that gain is subject to tax at whatever the current rate might be.

To expect home owners to be subject to a 'special' tax is inequitable and just plain wrong.

Maybe if ALL possessions of ALL persons in the state were to be subject to this 'special property tax' then it would at least be equitable.

I do not accept this idea that it is so much of a privilege to spend hard earned income on one's home that it should be further taxed, while at the same time those who spend similar or more on other types of possessions are not subject to this 'special tax'.

If you want a wealth tax then all possessions must be included in the calculations. This includes movable & immovable possessions and savings and investments etc. etc..

Go down this road and you might end up with fewer taxes (a good thing) as most others would likely be covered by the wealth tax, income tax, inheritance tax and VAT.

Of course people would then be incentivised to spend their earnings on consumables, the vast majority of which are imported.
Have you calculated what effect that might have on the state's coffers?

Try getting that past any legislature!

Fred Cryton · 06-03-2020 8:05pm

Chips Lovell wrote: »

It's worth pointing out that property taxes have been in place for decades in other European countries and this has never been an issue.

I'm aware of people selling houses they've inherited to pay off inheritance taxes (some here but mostly in Europe) but having to sell to pay property taxes doesn't appear to be a thing.

Other countries in Europe don't have a tiny band of higher rate taxpayers who pay for everything. You can call them Middle Ireland or the squeezed middle or whatever. The tax burden is much more spread out in Europe.

In Germany someone earning €20,000 pays around €4,500 in income tax. In ireland, they only pay around €600 in income tax.

So taxes on wealth such as property in Ireland will AGAIN hit that narrow band of higher rate taxpayers with more tax demands.

We should be getting working class people on low wages to pay more tax in this country. Unfortunately that seems impossible politically

PeadarCo · 06-03-2020 10:15pm

Johnboy1951 wrote: »

Property tax on an owner occupied home is wrong.
It should not exist.

Certainly when someone inherits it, then they gain, and that gain is subject to tax at whatever the current rate might be.

To expect home owners to be subject to a 'special' tax is inequitable and just plain wrong.

Maybe if ALL possessions of ALL persons in the state were to be subject to this 'special property tax' then it would at least be equitable.

I do not accept this idea that it is so much of a privilege to spend hard earned income on one's home that it should be further taxed, while at the same time those who spend similar or more on other types of possessions are not subject to this 'special tax'.

If you want a wealth tax then all possessions must be included in the calculations. This includes movable & immovable possessions and savings and investments etc. etc..

And if you end up taxing all possessions you are still talking about a property tax as Chips has already mentioned. It's for most people easily the most value asset they have. Houses are also impossible to move unless you talk about demolishing them. Most other assets can easily be moved abroad. So if you want a wealth tax you are talking about a property tax unless you are only going to apply it to a small portion of the population. It sums up Irish politics supposedly left wing parties who aren't interested in taxing wealth because any broad wealth tax is effectively a property tax.

Remember we currently are in the middle of a housing crisis try telling anyone who rents or worse is homeless that owning a house doesn't have any value.

Princess Consuela Bananahammock · 06-03-2020 11:59pm

PeadarCo wrote: »

And if you end up taxing all possessions you are still talking about a property tax as Chips has already mentioned. It's for most people easily the most value asset they have. Houses are also impossible to move unless you talk about demolishing them. Most other assets can easily be moved abroad. So if you want a wealth tax you are talking about a property tax unless you are only going to apply it to a small portion of the population. It sums up Irish politics supposedly left wing parties who aren't interested in taxing wealth because any broad wealth tax is effectively a property tax.

Remember we currently are in the middle of a housing crisis try telling anyone who rents or worse is homeless that owning a house doesn't have any value.

You're confusing monetary value with intrinsic value. No one 'needs' to own a home. We do, however need shelter.

Johnboy1951 · 07-03-2020 12:22am

PeadarCo wrote: »

And if you end up taxing all possessions you are still talking about a property tax as Chips has already mentioned. It's for most people easily the most value asset they have. Houses are also impossible to move unless you talk about demolishing them. Most other assets can easily be moved abroad. So if you want a wealth tax you are talking about a property tax unless you are only going to apply it to a small portion of the population. It sums up Irish politics supposedly left wing parties who aren't interested in taxing wealth because any broad wealth tax is effectively a property tax.

Remember we currently are in the middle of a housing crisis try telling anyone who rents or worse is homeless that owning a house doesn't have any value.

What I posted was

Maybe if ALL possessions of ALL persons in the state were to be subject to this 'special property tax' then it would at least be equitable.

I did not advocate doing so.

I never said an owner occupied house/home had no value.
What it does NOT do is generate income, but does cost to maintain.

It exists from the taxed income of the home owner.
Applying another tax to it, just because it is not movable and is easily identified, is not reasonable nor equitable.

So let me say it yet again ....... there should be no special property tax on owner occupied homes.

If you want to tax property then tax property that is generating income. Try doing so on land and see how that goes.

Good loser · 07-03-2020 2:05am

efanton wrote: »

That is pure nonsense. A non home owner will be renting property.
Landlords adjust their rents to take into account the cost of any property tax or services. The tenant effectively pays the property tax and services and the landlord get away scot free for the taxation on the property they rent.
The tenants get EXACTLY the same benefit as those that own their own property. The street lights aren't switched off outside rented properties, everyone property owner or not benefits from public amenities

Peregrinus doesn't do 'nonsense'
By far the smartest contributor to this debate.

The rent of a property is a bargain/contract between a landlord and tenant.
Landlords cannot just nominate a rent and achieve it; supply and demand determines the rent.

Tenants get services from the local authority but they don't get the increase in asset value of a property as an owner does. Properties don't always increase in value - remember 2008.

Good loser · 07-03-2020 2:14am

Johnboy1951 wrote: »

LPT, deferred or not, is neither fair nor equitable.

If you are going to apply tax on property then do it for ALL property, not just homes, or none.

If in need of extra funding then tax wealth when it is generated, not after it has been taxed and spent on some possession, the purchase of which is also taxed.
..... income tax when generated and then VAT when spent.

I guess ye think that those who spent their wealth in a particular way (some would say wisely) should pay more tax than everyone else!

The whole point about LPT is that it is an asset/wealth tax.
If you 'tax wealth when it is generated' that is income tax.

Property tax is an additional way of getting tax revenue; If 95% plus of the countries in the world think it's an appropriate way of raising tax then the rational for it must be soundly based.

Just like car tax.

New Dail / New Taoiseach

Comments