Why don't the Greens propose a cap on rezoned land, asks Marc Coleman
LIKE anyone who has seen it, I will never forget the passion of Richard Harris as Bull McCabe in the film version of John B. Keane's The Field. Our attachment to the land is a deep-rooted condition. In the last century, folk memories of the Famine, the land movement and the poverty that afflicted rural Ireland turned into an obsession with getting, holding and increasing the land you had.
Some years ago it was suggested that we revive the proposal of the Kenny report to cap the price of land, as is done in most other European countries. Tom Parlon warned that this was a Stalinist attempt to undermine property rights, the implication being that if this sort of thing was allowed, before we knew it there'd be a communist revolution and red guards would come and confiscate our homes and intimate personal possessions.
That mentality may get another outing in the coming weeks over this week's proposal by the Green Party to slap a tax on undeveloped sites. As their finance spokesman Dan Boyle explained to me yesterday, the tax is aimed at encouraging the development of undeveloped land. It will apply to any bank of land which has been rezoned by the relevant local authority and be levied, at a rate of 5 per cent, on the gain in value that arises as a result. But the tax will only be payable if the owner of the land does nothing with it. If he or she sells it on for development and realises a capital gain, the 5 per cent of the capital gain will be set against the capital gains tax liability (although it should be noted that the Greens also propose to increase the rate of capital gains tax).
It's a modest enough proposal, and not the first of its kind. Over a decade ago, before the Celtic Tiger came along, a tax on the many derelict sites in Ireland was proposed. The idea never got off the ground. Some years later the infamous residential property tax caused the government of the day to become hugely unpopular and with justification: the idea that the family home should be taxed in any way shape or form is an obnoxious violation of a basic human right, the right to own a home.
But when proposed for land not held for residential purposes, well that's something else again. Bunreacht na hÉireann has a clause protecting the right to personal property (its clause number escapes me). Drafted in 1937, it was conceived at a time when there was a conceivable threat of either Stalinism or fascism undermining basic property rights. Like so many other provisions of the Constitution, it was subsequently applied by the Courts in ways that were probably never intended: the Courts' decision in the 1960s to abolish security of tenure is just one example. The possibility that it could be used to render unconstitutional a cap on the price of rezoned land might be another.
What is surprising is that, given where they are coming from, the Greens are not making such a proposal. No one begrudges land holders a reasonable profit. But as even the most free market economist accepts, a land bank is a monopoly good defined by its location and monopoly goods are one of the few areas where even free market economists accept the need for intervention. For example, electricity prices, however scandalous they are now, would be far worse if there was no regulator to reign in the ESB. Like electricity supply up until recently, when it was totally monopolised, the supply of land in a specific location within commutable distance of major town centres has monopoly characteristics and there is a case for capping its value and significantly reducing the cost of housing in the process. But don't expect any politician to touch this issue before this millennium is out. Decades after the social conditions that inspired the creation of Keane's tortured character, Bull McCabe is alive and well. mcoleman@irish-times.ie
Marc Coleman is Economics Editor of The Irish Times
