Income-related property tax fairer than household charge - ESRI

Wednesday 18 April 2012 16.56
ESRI says income-related property tax would be fairer than household charge
ESRI says income-related property tax would be fairer than household charge

The ESRI has said a properly designed property tax system would allow for the exemption of low income groups such as pensioners. 

Research carried out by the Economic and Social Research Institute supports the view that an income-related property tax would be fairer than the household charge.

The ESRI has been exploring various options for a property tax.

In particular it has been looking at what would be needed to raise the Taoiseach's target of €500m a year for a full property tax, compared with the €160m target for this year's flat rate property charge.

The ESRI says flat rate charges are inherently unfair, as everyone pays the same regardless of income level or property value.

It says that a model can be designed that would exclude very low income groups like pensioners or people on social welfare, and levy higher charges on high income groups.

It says an income related property value tax could provide such a model, and would need to be set at an annual rate of €2.50 per €1,000 of house value.

Under this model, the bill would be less than €2 a week for the poorest 30% of households, between €4-€7 a week for the next 30%, rising to €8-10 for the next 30%. The top 10% of earners would pay close to €15 a week.

Other research from the Economic and Social Research Institute shows that the average earnings of private sector workers remained virtually unchanged through the worst of the recession. The figures relate for the three years between the end of 2006 and the end of 2009.

The ESRI's research was based on data for individuals and enterprises from the National Employment Surveys, and it says the findings for Ireland are consistent with international evidence.

Firms that needed to adjust costs tried to avoid cutting wages, preferring instead to reduce staff numbers, hours worked and bonuses.