In advance of the referendum on 31st May, there appears to be a temporary lull in talk of austerity, at least talk by the Government. It almost feels like being back as a child at home when there are visitors, and you have committed some real or imagined transgression and you know as soon as the visitors leave, you’ll be in for a leathering. And the anxiety is that as soon as the referendum is out of the way on 31st May, we won’t be able to escape wall-to-wall coverage about household charges, septic tank registration fees, fines, prosecutions and the results of the expert group looking at charging structures for a new property tax in 2013 – the only certainty is the commitment with the IMF which states in the Memorandum of Understanding (page 83) there will be “an increase in property tax.”
But what about the household charge for 2012? Minister for the Environment Community and Local Government, Phil Hogan appears to have gone to ground in recent weeks. You might even have forgotten what he looks like, here’s a reminder
Remember the push to maximise the number of households registering for the new charge/tax in the weeks leading up to the payment deadline of 31st March 2012? Remember the dark talk of council officials being sent around to rap on your doors, of prosecutions and fines, of withholding tax clearance certificates? Don’t worry it will all come back to you after 31st May. For the time being though, Minister Hogan responded to a series of questions in the Dail this week which reveal the scale of non-payment of the charge and indeed call into question some of the claims made by officials in March and April.
According to Census 2011 there are just over 2m dwellings in the State. Some dwellings, mostly public authority rented housing will be exempt but that is understood to be about 150,000 dwellings and secondly there will be waivers for some households, mostly those in receipt of mortgage assistance and some people on unfinished ghost estates.
The Minister stated that so far, to the 14th May 2012, there have been 939,422 “declarations”, of which 16,360 have registered for a waiver meaning that some 923,062 households “registered for payment of the charge equating to some” €93m. Be careful with the Minister’s words, because it is understood that more than 135,000 of these households have registered to pay by four quarterly instalments – by 13th March, 14th May, 13th July and 10th September. So not all of this €93m has been received in cash yet, and some people who have paid the first instalment may decline to pay subsequent instalments.
So on the face of it, 939,422 homes out of about 1,850,000 homes have registered. That’s 50.8% of which at least 7% are apparently paying by instalments.
You might recall claims on 1st April that “An estimated 805,569 properties were registered for the €100 charge by the time the deadline passed. 1.6 million households are liable for the tax.” indicating that the psychologically important 50% had been exceeded – 50.4% in fact. Six weeks after the deadline it would appear 50.8% have registered and it may well be that some of the instalment payers don’t pay further instalments.
We also learned that of the 939,422 “declarations” to 14th May 2012, that 94,000 are postal “applications” or “applications” at local authorities and have not yet been processed. The Minister is assuming that all 94,000 “applications” result in a “declaration” but these may simply be waivers.
Of the 16,360 who have registered for a waiver, 4,403 are in receipt of mortgage supplement and 11,653 are on unfinished estates and a further 304 have waivers under both headings.
We also received from the Minister a breakdown of payments by number of homes as follows (eg 3 people have paid for 300-400 houses)
1 home – 548,228
2-10 houses – 88,255
11-20 houses – 1,265
21-30 houses – 279
41-50 houses – 62
51-100 houses – 103
101-200 houses – 29
201-300 houses – 4
300-400 houses – 3
The total number of payers above is 638,228 and presumably they account for 923,062 houses in total.
NAMA Wine Lake 
@: NWL The level of compliance with property taxes is as you correctly point out very poor. The purpose of the two Ged Nash questions was to look at the level of compliance of multiple property owners with both the NPPR & the household charge.
In relation to the compliance levels of multiple owners (i.e. those owning two or more properties) I have compared the Household Charge figures for 2012 with the NPPR figures for 2011. I have assumed that all those who paid the NPPR for one house also had a PPR, therefore the number of people liable to pay Household Charge for two or more house is 181,368 rather than the 45,397 shown for the NPPR
I have calculated the non-compliance levels as follows
2 – 10 properties 51.3%
11-20 properties 12.9%
21-30 properties 25.2%
31-40 properties 8.9%
41 -50 properties 7.5%
51-100 properties 12%
101-200 properties 19.4%
I appreciate that this I am using figures for two different years, however with the number of sales taking place, the comparison is I feel reasonable.
The need for strong property taxes as part of the funding is clear. However the levels of non-compliance not just among owner occupiers but also among some larger property interests is very worrying and raises fundamental questions regarding support for the institutions of the State and parliamentary democracy.
@Niall, as someone who recognises the enormousness of the scale of the deficit to be closed – a total of €18.7bn in 2013-2105 comprising €3.5bn in 2013, €6.6bn in 2014 and €8.6bn in 2015 assuming 2.2%,3%,3% real GDP growth in 2013,2014 and 2015 – I agree with you that we need a property-based tax. The €100 charge was very badly designed and implemented – the Minister had at least ten months to design something decent even if temporary, there is huge resistance based on its perceived unfairness and there’s little penalty for late payment.
There needs to be some honest talk about the adjustments that are in store for this country which by 2015 will amount to €5,000 per year per household based on 1.7m households and an annual adjustment of €8.6bn in 2015 alone compared with 2012.
@ NWL I agree with you that it was extremely badly designed and I also agree with you that Hogan has made a complete mess of it.
Apart from Mr. Hogan’s own shortcomings, his department also suffered far more than any other from McCreevey re-location fiasco, when most of the middle and senior management were scattered throughout the rest of the Civil Service and replaced with people from diverse backgrounds
A degree of the non-compliance may in fact be down to this perception, however we all feel put out by different taxes, charges or how State monies are expended. This however is not a legitimate excuse for non compliance with the law.
The failure by multiple property owners to comply is interesting in the sense of them hiding behind those who complain loudly. I have always felt the best friend of the rentier class is of course your local Trot!
Sinn Féin and a rag bag of others opposed waste disposal charges in the Dublin area, and encouraged people not to pay, leading to the reaction of disposal, making things worse.
The unwillingness of a large proportion of the population not to pay a democratically enacted tax raises huge concerns for the future. It seems to be an impossible task for anyone to design a property tax which will be “acceptable”
The size of the adjustment is very large, with particular problems in 2013 as many of the adjustments already made will begin to provide reasonable savings from 2014 onwards.
The need for strong property based taxes not just to increase revenue but also to partially replace the high dependence on income tax and VAT is very clear.
The lack of discussion as to where we are going or how we are to get there is shocking.
“The total number of payers above is 638,228 and presumably they account for 923,062 houses in total.”
Based, on the following guesses as to average numbers within each range, I think your presumption is correct.
1 home – 548,228 * 1 = 548,228
2-10 houses – 88,255 * 4 = 353,020
11-20 houses – 1,265 * 13 = 16,445
21-30 houses – 279 * 23 = 6,417
41-50 houses – 62 * 43 = 2,666
51-100 houses – 103 * 60 = 6,180
101-200 houses – 29 * 110 = 3,190
201-300 houses – 4 * 220 = 880
300-400 houses – 3 * 320 = 960
Total houses = 937,986
Reblogged this on Tomás Ó Flatharta and commented:
It is official – only 50 per cent of eligible victims have signed up to the house tax – many thanks to Nama Winelake for the story.
It’s worth keeping an eye on the NPPR tax, including compliance issues, since it is a progressive element in the new tax system and because it is successfully bringing in real money. Even on the figures above, the compliance problem is much less than it was with the Household Charge.
I think Hogan said that he was thinking of doing away with it when the full property tax came in, but I dont think we can or should forego the revenue. Perhaps better to raise it by another €100 per property every year for another few years?
@ Otto You raise some interesting issues in relation to the NPPR. There certainly seems to be compliance issues in relation to the number of people paying it and the number of holiday homes & other housing stock declared in the census. The level of compliance looks far below where it should be and the wording of the original questions asked by Ged Nash was an effort to flush out some information on that issue http://www.kildarestreet.com/wrans/?id=2012-04-18.3488.0&s=Nash#g3489.0.q
As you will see from the answers, the number of properties returned increased by nearly 38,000 between 2009 & 2011. The 2012 figures should also see a further increase in the numbers declaring properties and the properties themselves.
Increasing the charge by €100 or 50% would yield at most €40M, a small amount for a lot of political hassle.
Thanks for that reference to the TD’s question and data. My own view is that if the government wants to more-or-less keep to its promises i.e. no new income taxes, no dramatic cuts to welfare spending, then taxes for everything else need to rise a lot. Every €40m counts! And perhaps it could go up a lot more than that over five years.
I am under no illusions as to which way property tax / household charge will go.
Just like motor tax it will be raised ever onwards and upwards. For example observe the taxation rates of pre 2007 cars. Once one crosses the 2 lt engine size it goes up dramatically.
If a person is prepared to pay 660 euro annual motor tax for pre 2007 2lt car, how much are they prepared to pay annually for a 1200 sq ft house?
And if you get above your station, desiring to live in a 2000 sq ft house, well well well, that is going to cost you dearly sir.
Just as motor cars with large size engines have been taxed almost to extinction, so it will be large houses, as if a 2000 sq ft house could be considered large. Depends on your mentality I presume.
It is going to be very interesting as to where the banding of property tax is going to be placed, however of this I am sure, the days of large engine cars are over in Ireland and so it will be with large houses.
Maybe they should just increase the motor tax a lot more year by year as the enforcement system is already in place and properly routinised, unlike that for the Household Charge.
@ Otto,
One needs to understand the mentality which exists in the dept of finance, the media, various left wing groups and of course the IMF / Troika etc.
Regardless of how expensive motor tax rates are, even if they are over 1000 euro per month to drive any car, as long as property is untaxed there will always be a movement to demand introduction of a property tax.
The Troika never looked at motor tax rates, they just saw, “O.K. cars are taxed, but property is not”. “Right you Paddies must introduce a property tax”
The argument that cars are highly taxed and because of this it could be seen as payment in lieu of property tax would never wash with these people.
These people are not going to be happy until EVERYTHING is taxed to death.
Of course the endless argument of how equitable or fair property tax is will then start in the media, “I pay the same property tax as my neighbor, but they have a conservatory and I don’t, why should I pay the same as them?”.
I mean could you imagine, if they increased motor tax rates and left property untaxed, the media would label property owners as tax cheats. Various left wing groups would be screaming “but this is so unfair and inequitable”.
We are just going back to penal times, a window tax, a tax on the size of gardens, swimming pool tax, number of open fireplaces, number of parking spaces on your drive way etc etc
Well tax increases are not fun. And this – just saw, “O.K. cars are taxed, but property is not”. “Right you Paddies must introduce a property tax” – is probably true.
But I am tempted by:
1. Seriously increasing revenues from taxes which are already established, routinised and relatively well enforced, such as car tax and the non-primary property residence tax.
2. Introducing a new property tax at a low level and working on making it fully established and properly rourtinised, before we try to increase the tax take from it dramatically.
@ Otto,
You could well be right in your approach, keeping it simple, getting the thin edge of the wedge in and then when every household is in the bag introduce the exponentional curve as in motor tax rates.
However with a 18 Billion deficit ( 3bn banks, 15 state ) they are just going to go down a big list of items and those which are taxed will be increased, petrol, alcohol etc and those which are not taxed will be levied in some shape or other.
There won’t be any thought given to Laffer Curves, wether it be cars or property that sort of understanding is way beyond these people.
The real problem is growth, we really will have to get our thinking caps on and see how we are going to export our way out of this mess. Perhaps signing more wind farm / wave farm agreements with the UK is one way out of it, start exporting electrons!!.
However if a lot of money is going to be spent in the manufacture of these energy devices then the British and Irish Govt’s should be insisting that these devices are made in the UK and Ireland to stimulate employment.
Even if it means Vestas (Danish wind generator manufacturer) have to set up a factory in the UK to make the gearboxes and a plant in Galway to make the blades etc. After all, he who pays the piper should be calling at least some of the tunes.
When VAT was first introduced here it was at a rate of 2.5% and was known as “Turnover Tax”. No one needs to be told what has happened since.
We no longer control our taxation policy. It is set by Timothy “tax cheat” Geithner and our German masters – and taxation strategy in the developed world is now globalised with information shared.
If Obama gets re-elected, we will see a new VAT tax in the USA to help deal with America’s $16 trillion (and counting) deficit. In Ireland we will see the escalation of the household charge into a fully fledged property tax. In the USA the average rate for that tax is 1.38% of the total value of the house. That’s what we are looking at here.
US Property Tax rates (average 1.38% of home value):
http://www.nytimes.com/2007/04/10/business/11leonhardt-avgproptaxrates.html
@wstt
US prop taxes are really only possible because the assessments are accurate and sale prices are public… openness and all.
Also O’Bamach will be re-elected, and I believe his only real threat comes from the fact he is not a deeply conservative, underpants ironing, yankee doodlee dooo. There sure is a strong conservative backbone in this country, but I think they have had their day. Rebulicans hardly even bother canvasing in San Francisco and I am proud to say, George Bush never visited the Bay Area as President. Obama has been here often…..check out ‘Woodside’ San Mateo County, he dines in private homes there, nice little spot, with horses and stables and redwood groves.
@ WSTT,
Interesting fact, 1.38% (average rate) for US properties.
For Ireland to close the 18 B / annum gap we could be looking at 1.38% property tax too.
So what does this mean for Paddy?
Take a 740 Sq foot 2 bed apartment in Dublin, valued around 200K. At 1.38% that is 2760 euro per year every year property tax which one has to pay.
That’s about the same as a months salary (after income tax) for a single secondary school teacher with 20 years service of being abused by immature teenagers.
And of course there are only 12 months in the year! But will 1.38% be enough to close the deficit? Will 1.38% be enough for the begrudgers?
I would not be surprised if this tax is shouldered upon the owner of the property and is non tax deductible for calculations on profit / loss if one rents out the property.
[…] have registered. That’s 50.8% of which at least 7% are apparently paying by instalments. The To those who voted YES, Your all fecked now! Reply With […]