Sir, – I note with interest your editorial in relation to the residential zoned land tax (RZLT) (“The Irish Times view on taxing undeveloped land: fear of vested interests stymies progress”, August 20th).
I’m in favour of the concept of a zoning tax being applied which enables all parties to be assured that a reasonable time after zoning, this land (our core industry raw material) will become available for development. The objective is to prevent zoned land not being developed so its price can increase. We all agree with this. However, there are also genuine reasons why zoned land cannot be developed that are outside the landowner’s control and which the RZLT should not be applied to. This includes land which is impossible to be developed in the short and medium term, and in some cases even in the long term, because of issues in relation to a lack of infrastructure and utilities, or indeed has become unviable due to increased cost of development or cost of funding. Any land that is in the planning process, where genuine attempts are in train to get planning, should not be subject to this zoning tax. The simple fact is this tax proposal was never fully thought out and attempts to implement it are highlighting a range of unintended consequences.
I would repeat that the zoning tax should be properly directed at land which is capable of being developed and which is not in active use (farmland, industry, etc).
However, it is extremely frustrating to read and listen to so-called experts suggesting this is a silver bullet when in fact it’s likely to become a development tax on future house purchasers, which was never the intention.
People shouting from the rooftops about hoarding should first of all understand what hoarding is and what it is not. A tax which hasn’t been fully thought out and is being applied inappropriately is not going to help deliver housing which our citizens so desperately need. – Yours, etc,
MICHAEL O’ FLYNN,
Chairman and CEO,
O’Flynn Group,
Ballincollig,
Cork.
Sir, – The tax on developers, investors, speculators, etc, should relate to the profit they might be expected to make when the completed development is sold. Development profit and land value are often a similar proportion of overall sales value, so a 3 per cent tax on the land component might very roughly equate to a 3 per cent reduction in eventual profit in many cases. Profits made by a developer who delays for five years might thus be 85 per cent of those obtained by a similarly placed developer who starts building immediately, a not unreasonable reduction.
If the tax is on active farmers is to involve a similar level of persuasive effect, it should relate to the annual income they might expected to make on zoned land if they continued to farm it, which is a very much smaller amount than its capital value as development land. A 3 per cent tax on that capital value will be a multiple of annual farm income from that land in almost all cases.
We are running out of time, and may need a quick and simple way of aligning the incentives faced by developers and active farmers. One obvious possibility is to charge active farmers a small percentage of the agricultural value of the land, instead of the development value.
The State cannot simply say to the relevant farmers that they can take as long as they like to make their zoned land available for development, at no cost to themselves. Zoned land is only subject to RZLT if it can be connected to local infrastructural services, and at some stage these have been provided at public expense. Also, most zoned farmland is sold for development eventually, but allowing it to be held costlessly strengthens owners’ bargaining positions, and makes holding out for higher prices and optimum selling conditions more attractive. – Yours, etc,
Dr NICHOLAS MANSERGH, MIPI,
Cork.