Property Tax - Will you pay?

[DerKaiser]

I'm curious at to what money is actually being used to pay this €700m, and the bank bailouts? Where is this money coming from?

According to a few posts on this thread, it's not tax payers' money being used, so where are we getting it?

I'm glad you asked.

The one place its not coming from the current generation of taxpayers. As I've pointed out, we're not even generating enough tax revenues to fund the day to day running of the state - health, education, social welfare, etc.

So the €700m will come from one of two places:

1) Future taxpayers. This very well could be us, but we have not yet cut spending or raised taxes to anywhere near levels that could be described as us paying off the banking debts.

2) There is a large chance that, like Greece, we will default. We might have €200bn national debt by the time we balance the books. If the money markets don't trust us to repay that sum of money there will be a default. If we default to the tune of 25% we will effectively not have not paid for the banking crisis. If, like Greece, we default to the tune of 50%, not only will we have avoided paying for the banking crisis, we will also have not paid for €50bn of our own day to day spending!

 

[orka]

I think I read that the plan is that the property tax can be accrued if the property-owner has insufficient cash to pay it and then when the house is sold/inherited, the tax becomes due then.

If it accrues at the same rate as the NPPR (10% simple interest per month) some people will end up losing all the equity in their homes within a decade. This could amount to effective confiscation by the State of vulnerable people's property.

With the NPPR there isn't an option to NOT pay and let the charges accrue (well, not an official, reasonable-option one...) - the money has to be paid fairly soon after it's due or penalty interest starts to roll up. My understanding with the property tax is that the accrual option (if such a thing comes to pass) would be there to help cash-poor people so I expect any interest would be a modest annual amount (CPI inflation maybe?).

 

[T McGibney]

With the NPPR there isn't an option to NOT pay and let the charges accrue (well, not an official, reasonable-option one...) - the money has to be paid fairly soon after it's due or penalty interest starts to roll up. My understanding with the property tax is that the accrual option (if such a thing comes to pass) would be there to help cash-poor people so I expect any interest would be a modest annual amount (CPI inflation maybe?).

Fair enough in a way, but there are plenty of cash-poor people being caught by the NPPR and its late payment provisions, and this vicious treatment bodes ill for how the property tax will operate in similar cases.

 

[Shawady]

The current budget deficit is totally our own making though and within our control.

True, but whenever the government introduces a measure to rectify the situation it is met with the usual protests. Everyone agrees we are living beyond our means but most don't want any measures to affect them.

 

[werner]

Purple, here is who we are being forced to pay:


€700m of our money was given to these people earlier this week.
I'm not referring to someone who bought a house at the peak of the bubble and are still paying off their mortgage, or even Mr McSavvy that bought 5 houses for speculation.

This is where your 'property tax' is going.

Well said!

To make matters worse many people voted for FG believing that Min Noonan and friends would actually toast the unsecured Bond holders a little. Instead FG/Labour are behaving as members of the FF/green continuity party

This is a quote from Noonan last year, I will never trust or believe anything FG says again

"What legal or moral compulsion is on Ireland, however, to honour in full debt incurred by Irish banks when there was no State involvement in the arrangements? These loans were entered into freely by willing lenders and borrowers with absolutely no State participation. … It is obscene that liability for these loans is now being transferred to the Irish taxpayer, in many respects to the poorest of the Irish taxpayers.


In the budget the Minister for Finance reduced social welfare payments, punished the blind, disabled, widows, carers and the unemployed and he taxed the poorest at work, and for what? It was so that the taxpayer can take on liability for debts the country never incurred and arose from private arrangements between private institutions. What a disaster and an obscenity.

The latest available bank data shows that Irish guaranteed bank debt has been sold on at a discount to hedge funds in the USA, the UK and Luxembourg, as well as to smaller speculative investors… The position has now become indefensible that the Irish taxpayer, even the poorest taxpayers, should be required to underpin the speculation of hedge fund investors. There must be transparent, open, negotiated burden sharing of bank debt."

I do agree with Min Noonan, as he states, it is a "disaster and an obscenity" to squander Irisih taxpayers money in this way

FG / Lanour Property tax. some chance!



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[Purple]

There is no link between a property tax and paying bond holders.
Der kaiser's excellent post above explains that.

 

[z107]

There is no link between a property tax and paying bond holders.
Der kaiser's excellent post above explains that.

If you and Der kaiser want to convince yourselves that some how you are not going to pay for the bank bailouts and the €700m, that's fine. I won't try to argue with that.

I know that this money is only coming from one place - Irish taxpayers, present and future. For me, this makes most sense.

You can call the new taxes whatever you like, property tax, poll tax, community charge, USC, but it's all going into the one pot.

 

[Purple]

If you and Der kaiser want to convince yourselves that some how you are not going to pay for the bank bailouts and the €700m, that's fine. I won't try to argue with that.

I know that this money is only coming from one place - Irish taxpayers, present and future. For me, this makes most sense.

You can call the new taxes whatever you like, property tax, poll tax, community charge, USC, but it's all going into the one pot.

OK, even if it's all going into one pot only a quarter of it will ever be spent on banking debt.

 

[DerKaiser]

If you and Der kaiser want to convince yourselves that some how you are not going to pay for the bank bailouts and the €700m, that's fine. I won't try to argue with that.

I know that this money is only coming from one place - Irish taxpayers, present and future. For me, this makes most sense.

You can call the new taxes whatever you like, property tax, poll tax, community charge, USC, but it's all going into the one pot.

I'm not arguing anything other than currently we do not pay enough taxes to cover our day to day spending.

We should have no problem with spending cuts and tax increases up to a point where we are balancing the current budget and paying down government debt built up through running current budget deficits in the past.

I'm not in favour of the taxpayer footing the €50bn banking debt in full. This is wrong.

But we do need to increase taxes and cut spending to cover day to day spending and to pay off any past shortfalls in covering day to day spending. With €11bn+ p.a. in current budget deficit and over €100bn racked up from previous deficits we really do not have a leg to stand on in terms of opposing a taxation measure that generates €0.2bn p.a.

The other reason I'm relatively laid back about the banking debt being added to the national debt is:

1) That is EU policy and we really have no choice other than to toe the line on this for now

2) I believe, like Greece, we will need to default on a portion of debt in the future. My best estimate is that this will effectively mean that we will never end up paying the banking debts

 

[oldnick]

I'm not sure all economists would agree with Kaiser.
Many would argue that continually burdening a society with taxes may have the opposite effect than the one intended.

For example, higher taxes can lead to
--less spending which means factories, shops etc closing = more people on the dole.
--less endeavours/more emigration of our most productive people especially the ones society spends a fotune educating.
--ever increasing black-market/nixing activities resulting in even less money to the exchequer.
--increasing discincentives to save, invest, build or other activities that would appear to result in continually added taxes.

Increasingly, it is being realised that ever harsher austerity measdures do NOT result in an economy that is able to pay off it's debts..so to quote Kaiser people do have a leg to stand on opposing this taxation.

(This is, of course, besides the argument that one should not ,really, be paying these damn debts in the first place)

 

[Time]

I don't pay any Irish taxes so won't be paying this one either.

 

[T McGibney]

For example, higher taxes can lead to
--less spending which means factories, shops etc closing = more people on the dole.
--less endeavours/more emigration of our most productive people especially the ones society spends a fotune educating.
--ever increasing black-market/nixing activities resulting in even less money to the exchequer.
--increasing discincentives to save, invest, build or other activities that would appear to result in continually added taxes.

This isn't just theory. All these phenomena are already happening in our economy, with serious consequences all round.

 

[DerKaiser]

Increasingly, it is being realised that ever harsher austerity measdures do NOT result in an economy that is able to pay off it's debts..so to quote Kaiser people do have a leg to stand on opposing this taxation.

(This is, of course, besides the argument that one should not ,really, be paying these damn debts in the first place)

i'd be sympathetic to the argument that excessive cuts & tax hikes will not get us out of this mess.

what I'm not sympathetic to is people accepting no responsibility for ever repaying the current budget deficits we've racked up

 

[z107]

i'd be sympathetic to the argument that excessive cuts & tax hikes will not get us out of this mess.

what I'm not sympathetic to is people accepting no responsibility for ever repaying the current budget deficits we've racked up

I accept full responsibility for my mortgage, credit card, car loan (when I had one) and any other debts that I have willingly signed up for.

I don't see why I should also accept the debts of those that invested in bonds or hedge funds or whatever else that the government has unilaterally deemed that we must pay back.

 

[DerKaiser]

I don't see why I should also accept the debts of those that invested in bonds or hedge funds or whatever else that the government has unilaterally deemed that we must pay back.

I don't think you should accept them, but they're not part of the large current budget deficits I believe we should be taking responsibility for.

 

[DB74]

This isn't just theory. All these phenomena are already happening in our economy, with serious consequences all round.

Totally agree

 

[DerKaiser]

For example, higher taxes can lead to
--less spending which means factories, shops etc closing = more people on the dole.
--less endeavours/more emigration of our most productive people especially the ones society spends a fotune educating.
--ever increasing black-market/nixing activities resulting in even less money to the exchequer.
--increasing discincentives to save, invest, build or other activities that would appear to result in continually added taxes.

Just one other point on this. I think we are reaching a saturation point on incomes taxes in terms of disincentivising effort (and all the points you mention above), which is why a property tax is a lesser evil than an increased level of income taxes.

 

[Mpsox]

I don't see why I should also accept the debts of those that invested in bonds or hedge funds or whatever else that the government has unilaterally deemed that we must pay back.

And yet you are quite happy to accept that as a result of paying back those bonds that your deposits in your bank are secured and guaranteed. You have also historically been happy to accept and use the services and infrastructure that the state borrowed money to pay for.

 

[z107]

And yet you are quite happy to accept that as a result of paying back those bonds that your deposits in your bank are secured and guaranteed. You have also historically been happy to accept and use the services and infrastructure that the state borrowed money to pay for.

I would have preferred if the banks had collapsed. Yes, I would have lost money, but that's capitalism (or at least it should be).
If the banks had collapsed, there would be new, better banks that would have filled the gap. Look at what we got instead.

As for the infrastructure argument, well I'm certainly paying for this, so why shouldn't I use it? It's my money that paid for it. There is no such thing as 'state funds'.

 

[Mpsox]

I would have preferred if the banks had collapsed. Yes, I would have lost money, but that's capitalism (or at least it should be).
If the banks had collapsed, there would be new, better banks that would have filled the gap. Look at what we got instead.

As for the infrastructure argument, well I'm certainly paying for this, so why shouldn't I use it? It's my money that paid for it. There is no such thing as 'state funds'.

So if it's state funds why are you giving out about paying it back?. As for your comment on the banks, I'm sure you'd have been absolutely delighted to have seen them gone bust and your saving wiped out and that you'd never be on a bulletin board giving out about that. How do you know there would be new banks and not the old banks rehashed?