The least unfair way

18-04-2012 05:04PM #1

As we are going to have to pay a household/community charge of one sort or another. What would be the least unfair way to organize it. There is a subtle but important difference between trying to make it fair ( almost impossible IMO ) and trying to find the LEAST UNFAIR way to design it.

spank_inferno · 19-04-2012 08:29AM

I suppose if there was a statistical model that can combine, house value, house size and residents income.
(I'd imagine that would be pretty hard though).

Combine that with next to no waivers, and I think its as fair as it could be.

antoobrien · 19-04-2012 08:52AM

The current flat rate combined with charges for services.

If your on a mains - pay for it, if you've dug your own well, you've already done so

Same goes for sewers, phone, electricity, gas mains etc

bigjohn66 · 19-04-2012 09:02AM

First off is Location, Size and value of house.

Than, the most fare way to me is not to difference between anyone. Because I work and two jobs to keep up with things why should I pay more than a neighbour that has never worked a day in his life, gets his house from the council at €6 per week and has 4 children so will use more facilities and water.

One charge for all with no exceptions except pensioners that have paid into the system all their working life.

Dannyboy83 · 19-04-2012 01:56PM

My experience of these charges has been mainly in Lithuania and Poland.
They seem to be disastrous in those countries, and place a heavy burden on low income families, altho they don't seem to do 'waivers'.
I've heard of some ingenious ways of cheating the system also when it comes to water meters.

I thought the best way would have been to reform our tax system and then increase income tax rates.

Manach · 19-04-2012 02:04PM

Dannyboy83 wrote: »

I thought the best way would have been to reform our tax system and then increase income tax rates.

Exactly, as the basic gist of the ESRI report was suggesting.

EricPraline · 19-04-2012 02:12PM

bigjohn66 wrote: »

First off is Location, Size and value of house.

But which of those is first? There is often a trade-off between these criteria.

Prioritise by location/value and you're likely to punish urban dwellers (as per the original rates), prioritise by floor area and you punish those living in McMansions in poorly serviced areas. Either way, you alienate some section of the electorate. Presumably the government will go with whatever is the easiest, populist option to give them a slim chance of re-election.

antoobrien · 19-04-2012 02:17PM

EricPraline wrote: »

But which of those is first? There is often a trade-off between these criteria.

Prioritise by location/value and you're likely to punish urban dwellers (as per the original rates), prioritise by floor area and you punish those living in McMansions in poorly serviced areas. Either way, you alienate some section of the electorate. Presumably the government will go with whatever is the easiest, populist option to give them a slim chance of re-election.

That actually sounds like a good idea, seeing as the rush to buy houses & apartments in towns was the biggest feeder of the bubble.

juan.kerr · 19-04-2012 02:19PM

For a start, no waivers for spongers.

creedp · 19-04-2012 03:01PM

antoobrien wrote: »

That actually sounds like a good idea, seeing as the rush to buy houses & apartments in towns was the biggest feeder of the bubble.

Have to say Galway city and its surroundings had a pension for mansion sized houses (of course they were B&B's) long before the bubble .. I think taxing based on size, irrespctive of income would be fairer!! Also I don't know why wealthy pensioners shoud be exempt from this tax. There is plenty of wealth in them pensioners and this idea that they built the county or have been paying tax all their lives is hardly a reason not to tax them on the same basis as everybody else (i.e. subject to the same exemptions as everybody else) Younger people much more likely to have mortgages/childcare/school and college fees/etc and less disposable income. I can never understand why pensioners as a cohort of the population receive blanket exemptions but this is Ireland!

antoobrien · 19-04-2012 03:10PM

creedp wrote: »

Have to say Galway city and its surroundings had a pension for mansion sized houses (of course they were B&B's) long before the bubble .. I think taxing based on size, irrespctive of income would be fairer!!

You can build a rather large house in Galway for the cost of a very modest 3 bed in D5, so why punish people for not wanting to live in shoeboxes in Dublin?

creedp · 19-04-2012 04:04PM

antoobrien wrote: »

You can build a rather large house in Galway for the cost of a very modest 3 bed in D5, so why punish people for not wanting to live in shoeboxes in Dublin?

The problem is why should anyone be punished for owning a private residence? You paid for it/built it from after tax income. You may currently be paying a mortgage for the house out of after tax income. It does not of itself generate an income. Any other property asset/financia asset is capable of generating an income so why not tax commercial property/farms? Also just because you own a house and have a decent income doesn't mean you have disposable income to pay tax on a non income generating asset. Many people are in negative equity as have massive mortgages. May have to have two income family just to get by .. so relatively high gross/net income but very little disposable income. No recognition of this in the discussion .. simply all about how much more can be screwed out of people.

antoobrien · 19-04-2012 04:19PM

creedp wrote: »

The problem is why should anyone be punished for owning a private residence?

Think about it - property taxes can be used to stimulate or inhibit prices the economy far more than income tax (which is always decried as unfair).

And lets face it, if you can afford a mortgage you can afford the tax. The An beal bocht routine out of this country has well and truly worn its course - nobody is listening.

So here's a suggestion - ditch that plasma screen that you have for the sky box in the front room and the LCD for the one in the kitchen, the nikes that will only last 6 weeks, because they aren't essential. Hell with all the free time one might be able to you might actually learn something productive (mobile app development, knitting) and earn a bit of money on the side.

aquaman · 19-04-2012 04:21PM

antoobrien wrote: »

That actually sounds like a good idea, seeing as the rush to buy houses & apartments in towns was the biggest feeder of the bubble.

Houses & apartments in towns are far less of a drain on an economy and better for the environment than dispersed settlement.

Of course there was more of them constructed in the boom than 1 off rural dwellings, this does not mean that euro for euro, houses in towns were somehow more to blame for inflated prices.

dulpit · 19-04-2012 04:31PM

I think what another poster has said about services is something that is very important, so if you live in an area where you need your own well, have no street lights/etc, you should pay less than someone who has all of the facilities (if the house is otherwise identical). You will have to pay for well/septic tank/etc instead anyway.

I think it is fundamentally unfair to base the cost of your household tax on your income though. If 2 people live next door to each other and the houses are identical, the fact that one house has a couple who both have good, high-paying jobs and the house next door has a couple who both are on social welfare should have nothing to do with the charge being applied. We don't do that for cars and such, do we?

aquaman · 19-04-2012 04:33PM

The least unfair way of general taxation or of a property tax?

General taxation:
All (non essential) assets, wealth and income are assessed and a tax bill is calculated based on same. Tax avoidance schemes/ industries are wound down as generally these end up benifiting the super-rich disproportionatally.
Also a sliding scale of taxation so those who have more pay proportionally more as they can afford to do so (the opposite to current set up)

Property Tax:
Tax all non essential property, ie. second homes, rental properties.
Charge everyone (no waivers) in a reasonable way for services used , make these service charges tax deductable under general taxation in order not to tax the less well off excessively in proportion to their income.

creedp · 19-04-2012 04:34PM

antoobrien wrote: »

Think about it - property taxes can be used to stimulate or inhibit prices the economy far more than income tax (which is always decried as unfair).

And lets face it, if you can afford a mortgage you can afford the tax. The An beal bocht routine out of this country has well and truly worn its course - nobody is listening.

Of course high stamp duty (property tax) rates in place during the bubble really showed how effective they were at inhibiting prices .. the ability to afford a property is much more related to disposable income/available credit than the levels of property tax. Retrospectively introducing property taxes when property values/and property owners are on their knees is simply rubbing salt in the wounds .. bacause we can .. not something to be flippant about in my opinion ... the 'beal bocht routine out of this country' ..'nobody is listening'. I'm happy you are in a comfortable position to express this view but you may not be aware that not everyone else is.

EricPraline · 19-04-2012 04:45PM

antoobrien wrote: »

That actually sounds like a good idea, seeing as the rush to buy houses & apartments in towns was the biggest feeder of the bubble.

As opposed to the glut of one-off bungalows, McMansions, and housing estates located in the middle of nowhere, or "commuter hell" as The Irish Times describes it today.

Difference Engine · 19-04-2012 05:04PM

The proposed property tax is supposed to fund the local authorities. Let the relevant authorities budget be the base for calculating the tax as this is the amount that has to be raised.

Each household could be assigned a cost of an arbitrary unit based on the services they consume, say for example:
being connected to public sewerage system costs 2 units
public water costs 3 units
general contribution everyone has to make costs 10 units
roads 5 units
street lighting 1 unit

Your household might have a cost of 20 units. Add up the units of every household in the local authority area, say 2 million. Divide the authority's budget by 2 million and you have a real cost per unit.

Everyone pays a reasonable approximation of the cost of the services they consume. You would still have to decide about waivers but the tax base should be kept as wide as possible.

It may not be feasible to use the local authority's whole budget if it would make it too expensive for people but the same logic can be applied to a set portion of the budget that they wish to raise from a property tax.

There would be a bit of work setting it up and costing everything but it would have the added benefit of taking a close look at where money is being spent.

There was an article in one of the newspapers recently suggesting something similar but I can't find it at the moment.

aquaman · 19-04-2012 05:27PM

Difference Engine wrote: »

The proposed property tax is supposed to fund the local authorities. Let the relevant authorities budget be the base for calculating the tax as this is the amount that has to be raised.

Each household could be assigned a cost of an arbitrary unit based on the services they consume, say for example:
being connected to public sewerage system costs 2 units
public water costs 3 units
general contribution everyone has to make costs 10 units
roads 5 units
street lighting 1 unit

Your household might have a cost of 20 units. Add up the units of every household in the local authority area, say 2 million. Divide the authority's budget by 2 million and you have a real cost per unit.

Everyone pays a reasonable approximation of the cost of the services they consume. You would still have to decide about waivers but the tax base should be kept as wide as possible.

It may not be feasible to use the local authority's whole budget if it would make it too expensive for people but the same logic can be applied to a set portion of the budget that they wish to raise from a property tax.

There would be a bit of work setting it up and costing everything but it would have the added benefit of taking a close look at where money is being spent.

There was an article in one of the newspapers recently suggesting something similar but I can't find it at the moment.

This is an excellent suggestion. However, the household charge is only nominally funding the local authorities.
In actual fact it is funding the dept. of environment & local government (in other words it's going into the general pot), who in turn distribute it back to the councils through the local government fund. The amount each council receives is not linked to household charge collected.

Were it the case that the property tax partly directly funded local authorities (with smaller allocations from central government to fund services which are of more national than local importance such as motorway maintenance), your suggestion would be the fairest means of calculating this charge. And would probably have the effect of reducing the burden on business rates payers.

antoobrien · 19-04-2012 06:56PM

EricPraline wrote: »

, or "commuter hell" as The Irish Times describes it today.

Describes living in Dublin perfectly

creedp · 19-04-2012 09:44PM

aquaman wrote: »

Tax all non essential property, ie. second homes, rental properties.

Why is it that people round on rental properties as if the owners are some kind of pariahs of society. I don't understand this. A rental property is a business just like any other business. Its owner has to buy it and service the business loan to fund it and the cost of it maintenance and upkeep. The rental income is an income just like everyothe business and income generated from it is taxed like every other business. Then why should it be treated any differently to an other business property/farm? I can understand if someone has a 2nd home for a holiday home but a rental property is not a second home. The owner does not live in it and therefore why is it treated like one? Is this a fallback to our 800 years of oppression where we see landlords as evil leeches in society who suck on the lifeblood of the ordinary joe tenant?

Cookie_Monster · 19-04-2012 09:57PM

combine all the current charges: bins, tv, water, household charge etc into rates. Issue rates based on combined 3 catagories: Urban / rural combined with square metres of house combined with a multiplier to account for local pop density. Obviously where density is highest less rates should be paid as there are more people to cover the costs of local services. An urban and rural class would allow some offset of less density in rural and bigger house sizes in general and thus reduce it somewhat for rural payers.

If you own the property you pay it, no exceptions. If you rent from council or in social housing you pay it, no exceptions.

aquaman · 19-04-2012 10:31PM

creedp wrote: »

Why is it that people round on rental properties as if the owners are some kind of pariahs of society. I don't understand this. A rental property is a business just like any other business. Its owner has to buy it and service the business loan to fund it and the cost of it maintenance and upkeep. The rental income is an income just like everyothe business and income generated from it is taxed like every other business. Then why should it be treated any differently to an other business property/farm? I can understand if someone has a 2nd home for a holiday home but a rental property is not a second home. The owner does not live in it and therefore why is it treated like one? Is this a fallback to our 800 years of oppression where we see landlords as evil leeches in society who suck on the lifeblood of the ordinary joe tenant?

I did not "round" on anyone, I mentioned a number of areas of taxation one of which is non essential property, as it is essentially wealth.

The basis of what I consider to be fair taxation is to tax wealth & luxuries first (ability to pay philosophy).
1 home is a necessity; more than one house is a luxury, a potential income generating asset.
If this second property is operating at a loss eg. negative equity and mortgage payments exceeding rental income. It is then a not an asset and should be used to offset tax obligations. Otherwise this asset should be taxed.

K-9 · 19-04-2012 10:55PM

aquaman wrote: »

I did not "round" on anyone, I mentioned a number of areas of taxation one of which is non essential property, as it is essentially wealth.

The basis of what I consider to be fair taxation is to tax wealth & luxuries first (ability to pay philosophy).
1 home is a necessity; more than one house is a luxury, a potential income generating asset.
If this second property is operating at a loss eg. negative equity and mortgage payments exceeding rental income. It is then a not an asset and should be used to offset tax obligations. Otherwise this asset should be taxed.

This tax effects landlords too, in addition to the €200 NPPR charge, so second home owners are paying more. I don't really see your objection.

creedp · 20-04-2012 08:42AM

aquaman wrote: »

I did not "round" on anyone, I mentioned a number of areas of taxation one of which is non essential property, as it is essentially wealth.

The basis of what I consider to be fair taxation is to tax wealth & luxuries first (ability to pay philosophy).
1 home is a necessity; more than one house is a luxury, a potential income generating asset.
If this second property is operating at a loss eg. negative equity and mortgage payments exceeding rental income. It is then a not an asset and should be used to offset tax obligations. Otherwise this asset should be taxed.

I wasn't 'rounding' on you specifically but simply referring to a general perception in the media, etc that rental properties are something to be screwed as a second home as of course anyone with a 2nd home is wealthy.

A rental property is like any other business property .. are you advocating that the corner shop should be levied a property tax in hte same way as a rental property .. its a second property for the owner (or at least not thier principle private residence.

Unlike other businesses a rental income loss cannot be offest against other tax liabilities nor can be it carried fwd to offset future losses, yet it is combined with all other income earned and taxed at the marginal rate. For petes sake you can't even write off the full mortgage interest against your rental income. Every other business can write off the interest charged on business related loans why not a rental business? By the away if you are advocating that rental [any] properties should be taxed at their net asset value I would agree with you.

Sleepy · 20-04-2012 09:59AM

The fairest way I can think of is to subtract the outstanding mortgage value from the property valuation (i.e. the capital someone has in their property) and tax that. Obviously it's open to manipulation by people re-mortgaging properties they currently own out-right but once the tax rate was lower than the mortgage interest rate I can't see many doing that.

It would remove the tax burden from those in negative equity though I'd imagine we'd get uproar from the pensioners who own their homes outright and don't believe they should pay for the mistakes of the governments they elected.

There's possibly a valuation problem here but with the new database of sale prices coming on board, establishing the market value of a property should become far easier and a punitive fixed rate could be put in place to encourage people to get their home's valued for the purposes of the tax (either by an existing government department or by private companies awarded the task based on competitive tendering processes.

Borderfox · 20-04-2012 10:06AM

Just put taxes up, I don't trust the government to calculate anything other than their outrageous salary.

Sleepy · 20-04-2012 10:12AM

Increasing Income Tax makes the dole an even more attractive prospect for many, makes us a less competitive country in which to locate a business and ignores the fact that income is not the same thing as wealth (or ability to pay in economic terms).

That's why developed economies use a mixture of wealth (property) taxes with income taxes: it's better for the economy and more equitable as you can't argue that a family paying a mortgage on a 3 bed terrace in Finglas on a single income of 40k a year have more ability to pay than someone with a similar income derived from investments or pension that own a mansion in Clontarf/Killiney out-right.

EricPraline · 20-04-2012 10:19AM

antoobrien wrote: »

Describes living in Dublin perfectly

Except the article is about commuting from Wicklow to Dublin. But if you commute from Dublin to somewhere else, carry on.

antoobrien · 20-04-2012 10:20AM

EricPraline wrote: »

Except the article is about commuting from Wicklow to Dublin. But if you commute from Dublin to somewhere else, carry on.

I commute within Dublin to Dublin city center. It's still hell.

The least unfair way

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