herald

Tuesday 22 August 2017

Plans to defuse the property tax timebomb

Interest on the national debt was €2bn in the first three months, which is a lot of money, but almost €200m less than Mr Noonan pencilled in as recently as October
Interest on the national debt was €2bn in the first three months, which is a lot of money, but almost €200m less than Mr Noonan pencilled in as recently as October

The Government is expected to reveal its plans to defuse the Local Property Tax rate time-bomb next month as part of its bid for re-election.

It has emerged that the coalition looks set to use next month's Spring Statement on the economy to signal how it will spare homeowners major spikes in their tax bills.

The Herald has learned that both coalition parties are keen to remove any uncertainty over how much homeowners will be expected to pay in property tax after 2016.

Lingering

This is when the current charge period comes to an end and there is no desire to have the issue lingering as the General Election, expected next April, approaches.

Senior Government sources have indicated that next month's Spring Statement will be used to reassure homeowners that they will not be facing large increases in their tax bills.

"This is about giving certainty to homeowners. There is concern that Dublin homeowners in particular would be stung if the current model was reapplied in 2016. This will be dealt with," said one Government source.

The drive to eliminate any potential controversy over the property tax comes from a desire to avoid the chaos around the water charges which dominated the political agenda in the run up to last May's Local and European elections where both Fine Gael and Labour suffered losses.

Tax rates are currently calculated on property values in May 2013 and fixed for three years. Homeowners will be obliged to submit updated property values to Revenue in November 2016.

Increased

Given prices have increased significantly since 2013 when the rates were set, were the same model to be reapplied, homeowners would see increases of several hundred euro to their property tax bill.

But Finance Minister Michael Noonan and his fellow ministers are of the clear view that the limit of taxation has been reached and there is little enthusiasm to allow property tax rates to soar, particularly so close to an election.

hnews@herald.ie

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