Sir, – The recent announcement by the Revenue Commissioners that they intend to pursue those who may have understated the value of their property for local property tax purposes should alert people to a fundamental problem with wealth taxes and one of the reasons why such taxes are not more common.
Any tax based on wealth where that wealth is not absolute (eg, cash in the bank or certain types of bond), but based on market values, means that taxpayers are subject to the vagaries of that market. This is a particular problem where the asset in question does not generate any income.
A taxpayer whose circumstances, including their income, does not change much over a number of years can find himself or herself subject to increasing levels of taxation simply because the market thinks that their house (or that painting that they bought for a few hundred euro from an unknown artist 10 years ago) is now much more valuable than it used to be.
In the light of growing evidence of a scarcity-induced Dublin property boom in the offing, homeowners in the capital should probably gird their loins and start saving now. – Yours, etc,
FRANK E BANNISTER,
Morehampton Terrace,
Dublin 4.