Irish Homeowners Hit by New Local Property Tax

on Dec 6, 2012
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**Ireland’s Sixth Austerity Budget**

The Irish government on Wednesday submitted to parliament the 2013 draft budget aimed at raising €3.5 billion via property levies, child benefit reductions and increases in student contribution charges. This is the sixth successive dose of austerity for the Eurozone member since the 2008 financial crisis and it is a part of a drawn-out bid to balance the books under the terms of an EU-IMF bailout taken after a property crash ravaged the economy in 2010. Ireland’s latest budget, however, introduces the most severe measures to date, hitting every section of society and increasing the average person’s annual expenses by approximately €1,000.

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The new measures come on top of €25 billion taken out of the economy since 2008 — equivalent to 15 per cent of annual output — and the government is hoping to show the Irish public, which has so far been relatively willing to accept the severe measures, that the end is in sight. Opposition leaders, however, described the 2013 budget as “deeply unfair” and “disgraceful”, pounding everyone from families with children to the elderly.

**New Property Tax with Exemption for First-Time Buyers**
One of the most controversial of the austerity measures that were introduced on Wednesday was the new local property tax. Ireland’s Finance Minister Michael Noonan told the parliament that Dublin will next year impose an annual property levy — a move highly unpopular with homeowners at a time when many are deep in negative equity and struggling to pay mortgages.

The rate of the new property tax will be 0.18 per cent of house market value up to €1 million and 0.25 per cent on values above that level. The local property levy, which was previously set as not due for change during the lifetime of the current government, will take effect from 1 July next year and all owners of properties will be required to pay it. Yet the Irish government introduced a three-year exemption for property tax for first-time buyers purchasing new or unoccupied homes. There will also be an option for the unemployed, people in mortgage distress and qualifying pensioners to defer payment of the tax until they or their estate sells their homes.

**Anti-Property Tax Campaign**
The new property taxation will replace a flat €100 annual charge for local services introduced at the start of the year that sparked vociferous protests and resulted in a national non-payment campaign. Some 700,000 people, or 31 per cent of households, have yet to pay that charge and anti-property tax campaigners say they will resist the new charge too.
!m[Property Tax to Start at 0.18% of House Value as Dublin Unveils Sixth Austerity Budget](/uploads/story/978/thumbs/pic1_inline.png)Richard Boyd Barrett, a member of parliament for United Left Alliance said: “About 700,000 people have not paid the household charge in Ireland, which amounts to an unprecedented campaign of civil disobedience.” He added that “people will have no choice but to oppose this property tax because they don’t have the money to pay it.”
According to Minister Noonan, however, the property levy is a better alternative than to increase income tax. He also said: ”The local property tax is fair and progressive as all property owners make a contribution but those who own the most valuable properties will pay the most.”

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