Today, I received an infuriated email from a reader who was just about to pay more than €600 on behalf of his elderly father for an annual tax on the family home. His father, he pointed out, is a man in his 80s with a small pension and the kind of multiple health difficulties that arise at his age, yet he is expected to find a considerable wad of cash every year for local property tax.
The old socialists used to argue that “property is theft” – a daft assertion that had more to do with productive assets than homes, but the fact that a supposedly centre-right government is punishing family home ownership by levying an annual financial penalty feels more like like theft than a wealth levy to me. At the very least, its egregiously unfair.
My correspondent is not alone in feeling serious upset at the annual forking out hundreds of euro for the privilege of simply living in the family home which was paid for – or is being paid for – from an income already subject to income tax and PRSI through decades of mortgage repayments. It’s really a double taxation.
Many of the pensioners now being squeezed for Local Property Tax payments bought their family homes in the 1970s and 80s, a time when income tax rates went right up to 60% and when interest rates on homes loans reached the dizzying heights of 16.25% . In other words, purchasing the family home didn’t come easy. Yet we are all now being forced to pay for the supposed privilege of taking on the responsibility of providing housing for your own family.
Since many of my generation didn’t marry or purchase homes until we were in our thirties, most don’t even really own the homes on which we must pay this tax, because we’re in hock to the bank until we’re in our sixties, which is a pretty grim prospect. Paying property tax on an average Irish home for 50 years will cost you €30,000 if you live in Dublin – and more than €16,000 according to national average house prices.
It is not remotely fair that Local Property Tax increases as the value of homes increase. The shortage of homes is a issue that cannot be fixed by the average taxpayer – and said long-suffering citizens, especially much of the unfortunate squeezed middle, have nothing to gain from the spiral in house prices unless the family home is being sold. In the case of my correspondent’s father, and many more like him, it matters little that the value of his home has increased exponentially since the time of purchase. That increase – that supposed gain – is not realised unless or until his home is sold. But he hasn’t sold his home, so the fact that the value of his home is actually immaterial.
Similarly hundreds of thousands of us are being punished for a rise in house prices, although we haven’t realised any profit, have no control whatsoever over the factors driving that increase, and are currently paying enormous sums in mortgage repayments precisely because house prices have gone through the roof. So, while gains in the market are actually meaningless to you in real terms, you are being forced to pay more property tax in a rising market.
The legal and tax advisory firm Orbitus told the Independent last week that: “Substantial increases in property prices over the last four years have led to fears among homeowners that their home could trigger higher LPT bills for them”. The tax bills could become “unaffordable”, the report said, since the “median value of a home nationally has increased by 36pc since 2021”.
While Local Property Tax is often justified as a wealth tax, for most of us, that’s nonsense. Owning an average family home doesn’t make you wealthy, and you’re already been taxed on your income to the extent that it seriously reduces your ability to purchase a home. If the property tax was confined to mansions or to second homes or property portfolios, that would be a different argument, but that’s not what’s happening.
The government says that its property tax is “fair and progressive”. A progressive tax increases as your wealth increases, but that’s clearly not what’s happening here. Our family home may be worth more than it was ten years ago but most of us aren’t any wealthier because of that, in fact, given the cost of living crisis, most of us feel poorer.
The property tax was, of course, introduced at the behest of the infamous troika representing the EU/IMF which took over the running of the country for 3 years from 2010. The other tax they proposed – the Universal Social Charge, levied to pay the cost of bailing out the banks – is also still in place. Little wonder that Ireland was ranked the second worst of the OECD countries when it comes to individual taxation, according to a recent report.
Yesterday, Sinéad Gibney of the SocDems gave an astonishing left-wing defence of property tax, describing home ownership as “privilege”. But it shouldn’t be a privilege for your family to own their own home by dint of hard work and sacrifice – and to be able to rely on that security in old age. In fact, given the frightening spectre of becoming homeless at the whim of landlords in your old age, home ownership is a particularly laudable aim. The idea of well-paid TDs scolding the average home-owner for privilege sums up much of what’s wrong with modern political discourse.
The nonsense from the SocDems aside, property tax on one’s family home is unfair, a form of double taxation, and unjustified. It feels more like theft than a wealth tax. It should be scrapped.