NUI Lecturer proposes tax on tracker mortgages

Hi Paul

If you want to analys Alan Ahearne's record, I think you will find him well ahead of most of his fellow economists.

However, it's better to focus on the idea rather than the proposer.

There is very little about it in the article, and I would be opposed to it. But I would be prepared to listen to the arguments for and against.

Dr [broken link removed] of the National University of Galway also proposed the removal of mortgage interest relief on tracker mortgages
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Which is very different from imposing a tax on them.

Brendan
 
I know these are not normal times, but introducing a tax that targets people with trackers only, or removing interest relief of tracker holders seems inequitable.

In essence you are retrospectively taxing or penalising tracker holders for making a sound financial decision. Holders of trackers are not in a position to alter their contracts to their benefit when things are not working out as they hoped or planned. They are told they must honour the contract they signed.

A more equitable approach would be to look at the capital outstanding and write off an amount actuarially equivalent to any increase in the margin on the tracker. The banks would have to write off the writedown amount or park it off balance sheet hoping for an uplift to come-but at least the borrower gets something out of it.

Of course, the tracker holder will probably be locked out of any upside. A banking version of the 1913 lockout!
 
Alan Aherne was appointed as a ministerial advisor in March 2009 and so did not have a role in providing advice at the time of the guarantee which was given some six months earlier in September 2008.
 
The objective appears to be to grant less relief to those who pay less interest - in general that's tracker mortgage holders.

Would it be more equitable to grant the relief in bands by reference to the interest paid - what I mean by this is (and the figures are plucked out of an orifice, as "Drummo" would say!):

First 3k of interest - no relief (or a low %)
Next 3k of interest - 20% relief
Excess over 6k - 35% relief

This means that people who have more affordable mortgages get less of the benefit of relief. As someone who has no mortgage and no vested interest, I don't see a problem here - at the end of the day the tracker rates are already being subsidised.
 
One of the problems with the original proposal is that most of those who are getting tax relief on tracker interest paid huge prices for their homes. So they need the tax relief.

The government made the mistake of extending tax relief to everyone who bought between certain dates (2004 to 2008?) as a means of dealing with mortgage arrears. Of course, the vast majority of these were not in arrears.

mandelbrot said:
First 3k of interest - no relief (or a low %)
Next 3k of interest - 20% relief
Excess over 6k - 35% relief
.
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Would deal with it nicely. If I borrowed €400k @1.5% , I would get some tax relief.

If I have a mortgage of €200k @1% , I would get no tax relief.
 
We constantly penalise people for making sound decisions (i.e. saving) so I'm not sure that is enough of a reason not to do anything. Some might say in Ireland you are more likely to be penalised for your prudent decisions than your irresponsible ones!
 
DebtCert said:
Alan Aherne was appointed as a ministerial advisor in March 2009 and so did not have a role in providing advice at the time of the guarantee which was given some six months earlier in September 2008.
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was he not giving advise to Lenihan on a part time basis before he was officially appointed? I thought he was but I'll try and find something on line for that and get back to you
 
I heard this a few days ago. The other part of this was that the BANKS would receive the difference in interest relief. To me this would be illegal under EU competition law (illegal state aid).


I seriously cannot believe that this plan would get off the ground. Anybody on a tracker would go nuts over this.
 
Hello,

Alan Ahearne would be better off looking at his own personal situation and how he, as a well paid NUI Lecturer could pay more tax - directly or indirectly, I don't mind which ;)

My wife and I have a Tracker Mortgage on our modest 3-bed house (which we acquired in 2004, when we paid circa €55k stamp duty). We have made full loan repayments since a couple of months after we drewdown our loan (initial 2mth interest only period) and will continue to do so (assuming no radical change in our circumstances) for another 25-years, until the debt is repaid in full.

My estimate is that we are in negative equity, to the tune of approx €100k at this time & yet we pay our loan without question, never seeking to have our Bank write off part of our debt or throw the keys back across the counter etc ...

However, should the Government ever dare consider penalising us, because we made a sound decision when we opted for a Tracker Mortgage over a Fixed Rate or Standard Variable Rate product (a decision which was freely available to almost all who borrowed to acquire a home around the same time), then we will leave the country and assuming the house is still in negative equity, we'll leave it and it's debt behind us, never to return because there is no way in hell I or my wife would accept such a tax - we pay plenty of tax as it stands, it's only a shame that our taxes are not better spent by the Government !

Regards

Mr. Earl.
 
Interfering with those left on trackers will only add to the queue of people heading for 90 days in arrears as we speak.
But the inequity is startling between tracker and non tracker and should be evened out, of course the policiticans are seeing it in simple "get the money in lads" terms. (Drumm-isms being the new lexicon of our times). the poster Mandelbrot has the right idea.
Can This thread be emailed to Mr. aherne.
 
Delboy said:
was he not giving advise to Lenihan on a part time basis before he was officially appointed? I thought he was but I'll try and find something on line for that and get back to you
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Hi Delboy

He may well have been giving advice to Brian Lenihan, but that does not mean the Brian Lenihan took his advice.

If you wish to challenge his record, by all means do, but do so in a separate thread.

Keep this one for the discussion of the proposal, rather than the proposer.

Brendan
 
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