Minister for the Environment, Community and Local Government, Phil Hogan, has this morning published the Local Government (Household Charge) Bill 2011 which gives legal effect to the new household charge/property charge that will come into effect from January 2012.
It will apply to most homes in the State though there are exceptions such as mobile homes, houseboats, and, in the context of this blog, housing that has not yet been used as a dwelling; so NAMA’s new apartments and houses will remain exempt for the time being, unless they’re being rented of course.
The annual charge is €100 but it seems you will be able to pay it in four instalments but the Bill doesn’t give full details of the instalment plan. You can expect the €100 flat charge to increase after 2012. The betting is that the charge will ultimately end up at close to 0.5% of the value of a property each year, in other words if your property is worth €300,000, the annual charge will be €1,500 but to stress, the Bill introduced this morning is for “just” €100 and future changes to the charge is conjecture at this stage.
It is the owner who is liable to pay the charge, not a tenant for example. There are exemptions to those forced to pay the charge: certain trusts, property located in uncompleted estates, homes of the old or infirm where the usual occupant has been removed elsewhere eg a nursing home and where the owner is in receipt of mortgage interest supplement. There will be a one-year exemption on properties where the owner has died.
Local authorities will be able to demand information relating to the property to enable the Department of the Environment, Community and Local Government to compile a database which it seems will eventually be used to impose the successor to the €100 flat charge.
There’s a late payment fee of up to €10 for payments being up to six months late and €20 for 6-12 months late and up to €30 for 12+ months late payment. You’ll also need pay interest at 1% per month on late payments. Unpaid charges can be registered as a charge on the property and sellers will need evidence they are up to date with their payments.
So what happens next? You can expect a letter from your local authority which is responsible for administering and collecting the charges, and sometime in early 2012 you can expect to have to part with €100 or opt for the instalment plan which will probably mean €25 being paid each quarter. You can then expect a further letter requesting information about your property. If you don’t pay, the immediate penalties don’t look harsh, and I can see there being widespread non-payment in the first year, but remember the charge is attached to the property so they know where to find you, or at least find one of your valuable assets.
NAMA Wine Lake 
Is this Irish for POLL TAX.
“The poll tax conjures up images of feudal despots wresting the last farthing from the pockets of peasants. But the economic and political logic behind the Thatcher Government’s community charge is based more on ideology than on greed.”
http://www.nytimes.com/1990/04/23/business/furor-over-british-poll-tax-imperils-thatcher-ideology.html?pagewanted=all&src=pm
The admin,set up costs,enforcement would appear to wipe out the amount collected,ability to pay or value of house was not a consideration in initial phase.
The thin edge of the wedge,this will have to increase,the above is financially flawed never mind the morality of it all.
If the house is underwater,and foreclosed,in order to “sell” the predatory lender should pay it.In other words,hope it runs with th RE not the owner.
How will this work with farmers and those that are over the shop as it were.
@Vincent, I don’t see any exemption for residential occupation of premises which might also have a commercial use, and by implication the charge will apply to farmhouses and work/live premises.
There is the exemption for premises that paid rates. But does this mean just the bit designated commercial or the entire building. For if there is a choice then all he’s done is de-populate the town centres yet again.
And what about the Nuns. I see no exemption for property held by charities.
@VH section 4,and expinatary memo,looks like the new landed gentry,sorry religious orders will be PROTECTED once again in Ireland.
I don’t intend to pay this tax.
I paid stamp duty and VAT when I bought my house.
Don’t think you will be alone,projecting 160 mil year one,lucky to get half that.
Disappointed they are using revenue to fund Local Government Fund rather than applying the NPPR model. LGF is a poorly designed grant system where money raised gets spread around rather than directly related to funding services in the local area which it was raised.
Ms. Burton has followed through with her promise to tackle the increasing cost of landlord subsidies and the mortgage interest supplement. The Table below gives the cost for 2004 to 2012 onwards. (2004 to 2010 figures from SW Statistical Reports, 2011 from Revised Estimates and 2012 reflecting the adjustment.) All figures are in €M.
Year Rent Supplement Mort. Int. Supplement Total
2012 410.54 54.746 465.286
2011 465.54 77.246 542.786
2010 516.861 65.654 582.515
2009 510.751 60.885 571.636
2008 440.548 26.866 467.414
2007 391.446 11.624 403.07
2006 388.339 7.377 395.716
2005 368.705 5.834 374.539
2004 353.762 5.705 359.467
The cuts are greater than they seem because they do not reflect an increasing number of claimants. Therefore the cut of just under 12% on rent supplement is closer to 15% taking the additional number of claimants into account.
We are back to 2008 expenditure levels. However there will be a lot of unhappy landlords in the New Year, particularly in secondary locations in Dublin and outside of it.
More worryingly for landlords, there is greater pressure on the good lady in 2013. Demographic pressures at both ends of the age scale together with a fiscal straitjacket suggest that rent supports will be revisited in 12 months time.
wont be paying it….we paid huge stamp duty, have struggled to survive for the last four years…also will they be giving FREE valuations on what our homes are worth?..how do they propose to VALUE our properties?…we tried to sell ours!!…we got no offers
It was decided,somewhere,that ability to pay,value of house are non factors.
Also know as regressive taxation,specifically tailored to hit lower income people hardest.
@Niall with a little luck and the continued alienation of its base,a few more defections ,the good lady will have moved on to bigger and better things,where she belongs.By all accounts doing an exceptional job in a unenviable position.
As the biggest landlord in the State,has NAMA taken a position,similar to what it did on UORR.Assume it will have to be Landlord friendly,to be consistent.They are probably working on the numbers,put their top quants on it.
I am not paying this tax. Firstly, I am a mortgage holder who is almost certainly in negative equity and at constant risk of unemployment as I work for a company which may or may not be in business next year. Although I technically own my house, in reality the bank owns it, and I will not own it outright until the bank has been entirely repaid. At that stage I will actually own my house, and then I’ll consider paying a property tax on it. Secondly, I object strongly to the idea that the charge I pay for my modest dwelling is exactly the same as what Michael O’Leary pays, despite our vast disparity of income, and despite the fact that his house is worth far more than mine. Thirdly, thanks to this budget, I might, in six months, not be able to afford it: for someone who’s struggling, every euro lost is a problem (something that our overpaid and expensed Ministers might not grasp). I live near Gorey, and I have a suspicion that, come the next election, Brendan Howlin might retire, like the Fianna Fail ministers before him, rather than face the voters of County Wexford…
Are those on oap or others in receipt of soc wel benefits exempt from
this new household charge?
.
@Owen, from my reading of the Bill, only those in receipt of mortgage interest benefit get an exemption. So OAPs get no exemption whatsoever as far as I can see, and this cohort is likely to own their own property so won’t benefit from mortgage interest benefit. So yes they’ll be €100 a year lighter, and also are exposed to more costs from the reduction in the fuel allowance term from 32 weeks to 26 weeks.
Unusual these days for politicians to risk alienating senior citizens as they tend to be conscientious voters but this coalition has 4.5 years-odd to the next election.
@ NWL Three points, a very high proportion of OAPs do not use their full existing entitlement, therefore they will not be hit by the withdrawal of something they do not use.
Any effective exemption could only be done on the basis of an Age basis. Very few Public Service pensioners for example would be in receipt of a SW OAP. .Also very old private sector pensioners who were not, or their spouses were not in insurable employment, e.g administrative & management staff in Arnotts would also not be have an SW pension
Finally pensioners as a group are very much better off than other groups in Irish society.
I agree fully that they are the one group politicians fear because of their willingness to vote. However I understand that some sort of deferral may be put in place for the old dears, leaving the liability with their estate.
@Niall, thanks, very informative as always.
“However I understand that some sort of deferral may be put in place for the old dears, leaving the liability with their estate”
So the Govt is getting into the equity release business!
@ NWL Yes, it is possible. But it could be argued that they are already there with Fair Deal. I think we will have to wait to Committee Stage to see what amendments actually see the light of day.
On the issue of inheritances one of the revenue raising issues looked at by JB was to make inheritances liable to PRSI @ Class S in the hands of the lucky recipient. The minimum expected yield was over €200M. The size of the hole in the Social Insurance Fund is incredible considering it should really be in surplus at this stage of the demographic cycle.
It would have had Charlie Flanagan and the Fine Gael backwoodsmen choking over their porridge. However inheritances are income in the hands of the recipients, if currently well covered by various tax exemptions.
It just shows how much the old Probate Tax would be yielding if Bertie had not got rid of it.
Does Ireland allow reverse mortgages? That’s another way for the banks to give the old codgers a good screwing and cheat the heirs all in one fell swoop.
Yes Jake along with predatory lending.
If Ireland can do Poll Tax, I can do Poetry.
Around the world in 80 words:
When someone in London said
”Hey a single currency without a single government will be jolly unstable” Someone in New York phoned someone in Dubai
and said “ Hey I see opportunity”
“Where?” the reply
“Ireland it’s said”.
“Make it so, but first they need to be rich.”
So form Poland and Estonia,
Cebu, and Timbuktu,
they came and created a boom,
When it burst,
in Manhattan they were ready,
they even bought the debris
from NAMA
(nice price too).
Morning,
Occupy all County Councils – COUNTRYWIDE – until 1. the household charges and 2. Water charges are removed!
100 euro isn’t too bad. I’m more concerned about where it ends up. If it goes to 1000 per house (distributed around that average) and say 500 more for water, it’s pretty savage. Especially when this comes out of post-tax income.
That said, closing the deficit is going to be savage. Failing miracle job growth/further cutting expenditure/gifts from Europe, taxes will rise significantly. I does make you wonder if it’s doable.
If you’re going to be paying more taxes regardless, does it particularly matter if it’s raised via property over (say) income tax.
A alert native is default on r debt !!!!
Default on sov debt falls under “gifts from Europe” ;)
Unless EU/EZ gives the green light for a default (/burden sharing), it could be a very nasty option.
As a faint. Play. Exit strategy desperately required.in over r heads.
If we accept paying less then €2 a week now, do you think it will still be less then €2 a week the year after or two years from now? what will you do if and when it comes to €20 a month or more then that? its obvious the €100 a year charge is only a foot in the door tactic to get people to say that,s not much I can afford that, once you say that and accept it, just watch as the goverment rack up the property tax each and every year afterwards.
Its time to now to take a stand and refuse to pay any property tax, if we don,t do it now, we will look back in a good few years time when property tax could be say €1000 a year and wonder why didn,t we resist when they tried to get a foot in the door?
In regards to the property tax, for anyone that,s opposed to it, there is a national boycott campaign being built that,s underway, we have already held many succesful meetings around the country in galway,cork,waterford, donegal, kilkenny, …where the majority who have attended these meetings have agreed non payment is the only way to go,and remember if you decide to boycott it and not pay it, you won,t be by any means on your own, there are others like minded people who feel the same way, who have signed up to this campaign, check your local newspapers for meetings in your local area
For everyone against the household charge/property tax, please share this link on your facebook wall and ask all your friends to sign up to this campaign, we shall be stronger in numbers.
http://www.nohouseholdtax.org/
@Selma; VAT, now 23% started life as a 2.5% “turnover” tax.
will social welfare pensioners be exempt the 100 euro
@Dave, if they own their own home (as opposed to renting) and they occupy the home (as opposed to living in nursing home) and if they don’t receive mortgage interest supplement or live on a ghost estate then the likely answer is “yes” they will pay it. Which seems particularly harsh alongside the reduction in the fuel allowance period.
i worked as a plasterer for over 20 years but now have no job. i am entitled to no benefits as i was self employed.my wife has a job but on very low pay and we are barely able to make ends meet as we have 2 kids in school.we get 86 € pw fis. we have a second house which we bought in 2004 to provide, we hoped ,for our pension in years to come as i have no pension scheme. the rental income from this house leaves us 180 pm short which we have to make up.we already pay 200 € a year on this house to the government .how can they expect people like us to find more money. if this is a household charge each household should pay it.i only have 1 household. a tenant has their own household. or is it another property tax?i have a funny feeling this governments tenure will be very short lived.i feel they have no idea of what this will do to families trying to survive on 400 € a week but then again they get paid that per day! its time for us all to stand up for our selves before we end up living in a country where we have to do what we are told when we are told, rapidly moving away from a democratic society.
@po’g,…. Amen to that, Paul
[…] is a previous blogpost on here which examines the household charge and the legislation which gives effect to it. […]
what is the government given the householder for this tax eg pavements, street lighting, a road to the property, garda, schools, emergency services, and anything else that comes under “a duty of care to a citizen”. Suing the government under the status of “duty of care” is what every Irish citizen who has fallen foul to negative equity should be thinking about. Every government has a “duty of care” to its citizens and that care hasn’t been given by the Irish Government.
other than not paying this gift to the government and other than the silly penalties incured over the months,,,,what happens if you havent paid it say after 2 years?
also is it not a fairer way to just charge us on a percentage basis,,ie income under a certain amount are exempt,,,0.5% for everyone else..ie me 20,000per year ill pay 100euro,,,all the boys on 500,000 pay 2,500…would i be right in saying if it is done fair for all a lot of people will be much happier,,,
also i dont see the millions going to what they say it will be used for…we will never have anyway of knowing as they wont show us receipts….
canada here i come…….i so loved ireland,,,