Commission on Taxation report:THE EXPECTATION that the Government will reject a controversial element of the report of the Commission on Taxation, due to be published on Monday, is causing concern among some of the authors of the report.
One member of the commission pointed out that comments from Taoiseach Brian Cowen and Minister for Finance Brian Lenihan indicated that a property tax was unlikely.
“But the property tax would bring in €1 billion,” the commission member said. “The idea of the report is that it would be revenue neutral”, so a dismissal of the property tax measure would affect other changes suggested in the report, the commission member said.
He said the commission members had worked long and hard to arrive at their final report, which recommends raising taxes in some areas so taxes can be reduced in other areas, in an exercise designed to reform the tax system.
The commission was guided by the view of the Organisation for Economic Co-Operation and Development that lower corporation taxes and income taxes stimulate the economy. With corporation tax already very low, the core emphasis of the report would be on shifting the tax burden from income tax towards other areas, such as property.
Another commission member, also speaking off the record, said: “The report is a package and it should be seen as a package.”
Yet another said: “The intention is that it is an integrated package, and that is what the commission came to agree on ultimately.”
If the Government rejects the idea of a property tax, “it will be necessary to raise revenue elsewhere”.
The report outlines a “hierarchy” of taxes organised in accordance with their perceived effect on economic growth. “The tax that has the least impact on economic growth is property tax.”
However, another member of the commission had no difficulty with the Government taking an “a la carte” approach to the report. “They have to live in the real world.”
The introduction of a property tax would have to be done “softly, softly”, with it being clear that it was not a measure for raising additional revenue, the source said.
The introduction of an annual tax based on the value of houses would involve a major logistical effort that would take a year or more, according to one commission source. A first step would have to be the drawing up of a list of all the houses in the State.
The commission report recommends that stamp duty be abolished and that, in time, the revenue from property tax should be allocated to local authorities “as it is with most countries in the world”.
Taoiseach Brian Cowen last month said he was not “wedded” to the idea of a property tax.
“Now a property tax of itself – if you look at the total amount that is taken in property tax, any property tax anywhere – compared to the total tax take, it is not the big element . . . If we can find a way to better fund local authorities, let’s look at it,” the Taoiseach said.
“I’m not wedded to the idea of a property tax. But I want to make it clear that I want to come to a decision with my colleagues as to what is the best tax structure to keep as many jobs as we can in the country and provide a sustainable tax base for the future.”
