The Government has shelved consideration of a property tax and the issue is now off the Fianna Fáil-Green Party Coalition’s agenda.
Senior sources in both parties have told The Irish Times that a property tax would not feature in December's budget.
Some form of property tax had been mooted in recent months by Department of Finance officials as an alternative to deep cuts in public spending next year.
It was suggested that a flat rate property tax had the potential to contribute significantly to the Government’s target of achieving further savings of €3 billion in next year’s budget.
However, a number of Fianna Fáil TDs expressed strong opposition to such a tax while the Green Party leader John Gormley came out in opposition to a flat rate property tax.
A property tax was one of the key recommendations of the Commission on Taxation’s report on the reform of the tax system a year ago. The commission suggested that an annual tax on residential property should be introduced as soon as was feasible in order to rebalance the current tax system.
It recommended the development of an up-to-date valuation base for all residential, business, commercial and industrial property in Ireland but to date no substantial work has been carried out on this.
Speaking in Limerick today, Minister for Enterprise, Trade and Employment Batt O'Keeffe declined to comment on the property tax. He said the Cabinet would be looking at tax revenue and forecasts over the coming months and gauging their impact on the delivery of public services. “The message that we want to send out is this Government is committed to ensuring that public sector finances are in order and maintained in order,” he said.
Fianna Fáil TD for Dublin South East Chris Andrews tabled a motion opposing a property tax at Tuesday night’s meeting of the Fianna Fáil parliamentary party.
The meeting was addressed by Minister for Finance Brian Lenihan and afterwards Mr Andrews expressed the view that a property tax would not feature in the December budget.
“Effectively, it’s just not happening. I don’t think it’s going to be a runner this year. If the Government lasts until 2012, it will not be introduced in a budget only a couple of months before a general election,” said Mr Andrews.
The motion proposed by Mr Andrews and also signed by a number of other TDs read: “Given the collapse in property values nationally and the serious difficulties that many people are experiencing in meeting repayments, the Government must give a commitment that no tax on family homes be introduced in December’s budget.”
While Mr Lenihan told the meeting that he was not ruling anything in or out for the budget it was clear yesterday that the debate about a property tax is over for the lifetime of the Coalition.
A water tax is also unlikely to feature next year as the Green Party is committed to nothing less than a fully metered system.
Fitting every house in the country with a water meter could take years and will certainly not happen in time to provide extra revenue for the exchequer next year.
A widening of the existing tax base appears to be the only alternative to a property tax as a big-ticket item that can make a substantial contribution to the savings package needed for next year.
Mr Lenihan has pointed on a number of occasions to the fact that about half of the workforce is outside the tax net and a concerted effort to bring more workers into the net is likely.
With the Dáil now in recess Ministers will get down to serious work on their departmental estimates next week and the Cabinet will have a comprehensive discussion on budget options the following week.
The Dáil adjourned yesterday for a 12-week summer recess and will return in plenary session on September 29th. Committees will continue to sit for the rest of July and throughout September.
Opposition parties objected strenuously to the length of the recess but Tánaiste Mary Coughlan said it was a nonsense to suggest that the Government was on holidays for that period.
