# Should Tracker Mortgages be Taxed ?



## RichInSpirit (20 Jan 2017)

This was just something that ran through my head lately.

There is a bit of inequality between the interest rates charged on Tracker Mortgages and standard variable rate mortgages, fixed rate mortgages.
Tracker rates are protected by law but a tax could still be levied on them in my opinion to add to the state coffers, and make non tracker mortgage holders more content. In perhaps a similar way to the way DIRT tax is levied on people's savings.

And yes I do have a Tracker Mortgage myself


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## Joe_90 (20 Jan 2017)

Don't think a tax would work but I have argued that TRS should not apply to the first 1.25% of interest paid.


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## odyssey06 (20 Jan 2017)

What happens to your tax if the EU central bank raise interest rates?
Why not levy a tax on banks who charge variable interest rates out of line with EU average?
Why not allow Irish citizens to take out mortgages with German or Polish banks? Whatever happened to single EU services market?
So the Irish solution to an Irish problem is to penalise the one sector who are paying what they should they paying - rather than being ripped off by banks who have died had it not been for state bailout?
These are just some of the reasons why it's a really really bad idea [tm]


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## RichInSpirit (20 Jan 2017)

odyssey06 said:


> What happens to your tax if the EU central bank raise interest rates?



You could have a variable tax rate.


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## odyssey06 (20 Jan 2017)

Why even bother? Please explain how tracker mortgages led to the bailout?
Why not tax SVRs if it'd make some other section of the population 'content'?
What is the right that gives people with SVRs the power to penalise tracker mortgage holders, just to make them more content?
Let's just tax SVRs to add to the state coffers. That idea makes about as much sense as taxing tracking mortgages.
I suppose the government taxes everything else, so yeah, let's tax mortgage repayments. Why not? What have we got to lose?

I'm about 99% sure you are trolling, I just wanted to get some retaliations in first before I exited stage left.


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## Sarenco (20 Jan 2017)

I think we should definitely impose an additional tax on anybody that enters into (what turns out to be) a good bargain.  Why should they get all the breaks?

Good judgment should definitely be heavily taxed.


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## Bronte (21 Jan 2017)

We heard this before on here!

No it's not a good idea.
No it's not going to happen. 
No I don't begrudge people trackers. 

In actual fact I suspect most people with good trackers were the ones who bought too high. Because of the great tracker.


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## Daffodils (21 Jan 2017)

Sarenco said:


> I think we should definitely impose an additional tax on anybody that enters into (what turns out to be) a good bargain.  Why should they get all the breaks?
> 
> Good judgment should definitely be heavily taxed.



Well they did it with public sector pensions...


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## RichInSpirit (21 Jan 2017)

Sorry everyone for thinking. No I wasn't trolling, just asking a question that popped into my head. 
I think there's merit at looking at taxing loans (not just Tracker Mortgages) as a means of controlling borrowing. For example during the boom in the run up to 2007 / 2008 we (Ireland) c claimed to have lost control of setting our own interest rates independently of the ECB. Putting a tax on loans could have achieved the same results as raising interest rates.
There is a precedent in using tax to control movement of money. DIRT tax on savings to stop people hoarding too much money.
Also a tax who's rate can vary I think could easily be worked with the help of computers. I can explain this idea better if you like.
Anyway hopefully Minister Noonan doesn't read AskAboutMoney and this thread will be forgotten about in a few days


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## Brendan Burgess (21 Jan 2017)

Sarenco said:


> I think we should definitely impose an additional tax on anybody that enters into (what turns out to be) a good bargain.  Why should they get all the breaks?
> 
> Good judgment should definitely be heavily taxed.



I agree fully. And anyone who makes a foolish decision which costs them money should be compensated by the taxpayer or by those who made good decisions.

For example, this principle was illustrated when those who took out insurance with an unknown insurance company in Malta were  bailed out by imposing higher premiums on those who took out their insurance with Irish companies.

Or those who put their money on deposit in Irish Nationwide and Anglo to get higher deposit rates, were fully bailed out by the taxpayer.

Brendan


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## Brendan Burgess (21 Jan 2017)

So Richie, what you you actually do.

Impose a VAT of 100% on tracker interest? So if I am paying 1% , I would pay a further 1% to the government. 

They would pay this to non-tracker mortgage holders to even the field somewhat? 

One of the issues here is that many of those with cheap trackers bought at the top of the market, so their repayments are already very high.   And many of those with SVRs bought after the crash, so their repayments are actually lower, although the interest rate is much higher. 

We would have to introduce a CGT on unrealised gains in house prices and pay this to people in Negative Equity. 

Brendan


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## noproblem (21 Jan 2017)

Of course your idea will get backing Brendan. We're a society here in Ireland who begrudge anyone with good judgement and get on in life, so anyone who hasn't got the same results will want to see others get their comeuppance. A bit like the way the public service v private sector has been created to bring down wages, etc.


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## Gerard123 (22 Jan 2017)

I proposed to a neighbour who bought their house 40% cheaper than mine, and were complaining about having a std variable rate that I would solve their problem.  I would give them my negative equity mortgage and tracker rate in return for their mortgage and svr.  That would solve their complaint and they would have a tracker rate. Happy days. I hardly need to tell you the response.  End of their complaint.  

Sure why not. Tax me and subsidise their mortgage.


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## Bronte (23 Jan 2017)

Gerard did you really have that conversation with your neighbour.  It's brilliant.


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## Purple (23 Jan 2017)

How about broadening this out; why not take people who work hard and are skilled and impose a marginal tax rate of over 50% on their earnings so that they effectively work for the State two days a week... oh, wait, we already so.

The Egyptians used to get the peasants to work a few days a week to build irrigation systems and the odd Pyramid and we thought that was slavery and yet we are happy to take the earnings from two out of every five days people work and we call of progressive. We  get worked up over such small taxes while the elephant in the room is ignored. Of course the people who get worked up over the small taxes don't pay any other taxes so maybe it's understandable since it's the first time they have been asked to contribute in their lives.


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## so-crates (23 Jan 2017)

Leaving aside any issues of fairness - would it be worth it? How much cash would the government gain for how many people pissed off by an arbitrary line in the sand? In order to tax the "benefit" of having a lower interest rate you'd need to levy the tax based on the value of difference that lower interest makes. And you'd have to limit it to only those with a tracker rate that delivers an actual benefit (I am think about all those people that banks are currently trying to foist "current tracker rate" on because they are being forced to offer them). I suspect as a revenue stream it would be paltry and would not be cost effective. It simply wouldn't pay the government enough to be worth levying it.


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## Bronte (23 Jan 2017)

What about people with brilliant trackers who are in negative equity, should they be taxed.


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## Purple (23 Jan 2017)

This idea is very unfair. It would be like Civil Servants and Ministers with defined benefit pensions dipping into the pension funds of private pension holders and taking a large chunk out of what people have put by for their retirement. Oh, wait...


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## so-crates (23 Jan 2017)

Have you seen Willie O'Dea's latest brainwave, Purple? Tacked on as an afterthought to a report about him suggesting a change of legislation to force companies to fund deficits in defined benefit schemes they are closing, he is asking the Pensions Authority to "investigate the prospect of setting up a central fund, via a levy on pension funds, to help top up pensions in cases of company insolvency" ... so basically get DC contributors to pay for deficits in DB pensions 

http://www.independent.ie/business/...tighten-law-on-company-pensions-35376603.html


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## Setanta12 (23 Jan 2017)

Can't be VAT as financial services are exempt from application of VAT.


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## Setanta12 (23 Jan 2017)

What is the definition of a Tracker - after all, don't SVR rates use a rate (or added-to) which the lender has calculated based on tracking the market?


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## Purple (23 Jan 2017)

so-crates said:


> Have you seen Willie O'Dea's latest brainwave, Purple? Tacked on as an afterthought to a report about him suggesting a change of legislation to force companies to fund deficits in defined benefit schemes they are closing, he is asking the Pensions Authority to "investigate the prospect of setting up a central fund, via a levy on pension funds, to help top up pensions in cases of company insolvency" ... so basically get DC contributors to pay for deficits in DB pensions
> 
> http://www.independent.ie/business/...tighten-law-on-company-pensions-35376603.html


We already do that for the Public Sector. It's called general taxation. Why not just get us to pay for the rest of it as well?


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## Firefly (23 Jan 2017)

Sarenco said:


> I think we should definitely impose an additional tax on anybody that enters into (what turns out to be) a good bargain.  Why should they get all the breaks?
> 
> Good judgment should definitely be heavily taxed.



Brilliant!

Reminds me of when I joined my golf club a few years ago and a member was giving out yards about how much he had to pay to join compared to what I had to pay. I was so close to saying "Ah that's terrible. Who forced you to pay that?"


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## Gerard123 (23 Jan 2017)

Bronte said:


> Gerard did you really have that conversation with your neighbour.  It's brilliant.



I did. Not happy to get a big discount they also felt aggrieved and shortchanged not having a tracker.


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## Fella (23 Jan 2017)

Don't understand taxing trackers , took out a mortgage 2004 not in negative equity and on tracker rate. 
One thing I don't understand is the TRS ( tax relief on the interest ) I'm not sure why I and others should be entitled to this I don't need it and I understand it's only for mortgages which where taken out during a certain period . It's unfair and I'd be annoyed if I had a mortgage and was not receiving it while others are .


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## Sarenco (23 Jan 2017)

Couldn't agree more Fella - TRS should have been phased out years ago.  It's a complete waste of taxpayers' money.

The really mad thing is the extension of TRS beyond 2017 for those that drew down mortgages between 2004-2012 was one of the key issues that FF insisted on in negotiating the supply and confidence agreement with FG.  

Go figure.


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## so-crates (24 Jan 2017)

Definitely agreed on that. I saw that "policy" on the FF literature before the election and it sounded daft then. I "benefit" from it as I took out a mortgage in 2005 but at what cost? The benefit to me at this stage is marginal - it was a fatuous exercise in looking like they had the best interest of the poor people in negative equity at heart  I was most annoyed to find that it made it's way into the programme for government. I can think of far more important issues than lobbing a few quid towards people 8-12 years into a mortgage.


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