NoRegretsCoyote
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In conceptual terms a pension is simply deferred income. You aren't being taxed on it today because you will be taxed on it when you draw it down.
Otherwise pension fund is not a tradeable asset.
In conceptual terms a pension is simply deferred income. You aren't being taxed on it today because you will be taxed on it when you draw it down.Subsiding the purchase of a private 'asset' as in a pension fund?
That's not entirely true when you consider the tax free lump sum.In conceptual terms a pension is simply deferred income. You aren't being taxed on it today because you will be taxed on it when you draw it down.
Ok, so it may not be tradeable but it is private though, only for the use of that person. If it is ARF, part of it could be inherited (and yes taxed but then so can inheritance of property). The government in the auto enrollment scheme are contributing directly to the seed for that fund.In conceptual terms a pension is simply deferred income. You aren't being taxed on it today because you will be taxed on it when you draw it down.
Otherwise pension fund is not a tradeable asset.
I think there's a language issue here. I wouldn't use the term "subsidising" to describe the application of a tax exemption or tax credit.
If the state gives me money to buy stuff, that's a subsidy. If the state allows me to keep some of my own money to buy stuff, that's not a subsidy, it's the absence of a penalty.
Normalising the use of "subsidy" in this way simply normalises the idea that it's ok for the government to take as much of your income as it likes, and leave you with whatever they see fit. The bit you are left with after taxes isn't a subsidy; it was yours in the first place!
The relief was proposed to be given by way of a tax credit for mortgage interest.What tax credit/exemption are you referring to? I thought the issue here was the govt giving relief to individuals on interest charged by banks on mortgages?
If people are in arrears they hardly get evicted in Ireland. If one continues to pay at best of one’s capability I would say that chance to be evicted is very very minimal. And it’s not that a repossessed house would mean that it is not becoming again part of the property or rental market. The house would not be “lost”.I didn't squeal when I moved to Ireland and found myself on a relatively high fixed rate when so many others were on fixed trackers. Then last year I fixed at 1.9% for 7 years and the trackers are going North. That's how it goes.
BUT I do think that principal private residences are different from other asset classes, in that the state has an interest in keeping people housed, as otherwise it will need to deal with homelessness. I would prefer to see a model where if people are struggling with mortgage payments, they can get state help, in return for a % of equity passing to the state, which ultimately creates value for the state for social housing or homelessness. Wouldn't be popular mind!
To me the most significant issue is that usually I’d expect to see a ‘relief’ be somehow time bound for a crisis with a likely end date. For example, the energy credits made sense because there was a temporary spike in prices which it’s reasonable to expect will come back over time.So where are we with this debate.
Relief on a struggling familes PPR mortgage interest isnt same as giving a wealthy individual a grant to buy an expensive car. Ok the car is less bad for environment hence the grant but the families PPR provides a vital utility and should be protected.
In light of above isnt it wrong to say that this is subsidising private asset?
Not all mortgage holders availed of this relief in its past existence. Many will have drawn down on their PPR since it was abolished. Surely the logic behind itt last existence still stands i.e to relieve pressure on already struggling families.
Why again would this be opposed?
Classic populist arguments.Relief on a struggling familes PPR mortgage interest isnt same as giving a wealthy individual a grant to buy an expensive car.
No, that’s exactly what it is.In light of above isnt it wrong to say that this is subsidising private asset?
Because it’s a terrible idea.Why again would this be opposed?
You stated that the state shouldn't subsidize a private asset as a general rule.Classic populist arguments.
Kick off with the straw man, who mentioned expensive cars?
Then add the emotive language - “struggling families”.
Is the SF proposal limited to struggling borrowers? Nope.
Is it limited to families? Nope.
No, that’s exactly what it is.
Because it’s a terrible idea.
I did indeed.You stated that the state shouldn't subsidize a private asset as a general rule.
Well I have a concern that the State through its current housing policy is creating enormous liabilities for itself, where it will be compelled to provide far higher levels of housing supports to retired people - because they were never able to afford their own home. No principle will be violated by that, yet it could end up costing far more than measures such as this. It will be drifted into, and state liabilities will creep ever higher.I did indeed.
The fact that the State gives grants to encourage one form of transport over another doesn’t change my opinion.
It would (all else equal) encourage owner-occupancy which has positive social benefits - people who own their own homes are more likely to take care of the neighbourhood, engage locally, build communities, etc. People entering retirement with mortgages paid off also has positive social benefits and means less of a resort to the taxpayer for housing.What is the policy objective of mortgage interest relief? It’s a transfer of resources from taxpayers (including renters) to borrowers. For what purpose?
I think there's a language issue here. I wouldn't use the term "subsidising" to describe the application of a tax exemption or tax credit.
If the state gives me money to buy stuff, that's a subsidy. If the state allows me to keep some of my own money to buy stuff, that's not a subsidy, it's the absence of a penalty.
Normalising the use of "subsidy" in this way simply normalises the idea that it's ok for the government to take as much of your income as it likes, and leave you with whatever they see fit. The bit you are left with after taxes isn't a subsidy; it was yours in the first place!
That very much sounds like the type of arguments that the Tories put forward in the 1980s to justify selling off their social housing stock.It would (all else equal) encourage owner-occupancy which has positive social benefits - people who own their own homes are more likely to take care of the neighbourhood, engage locally, build communities, etc.
Look at the Irish state. Are they capable of a strong, professionally managed PRS sector? Have you seen Dublin City Council's rent debts? The reason why DCC got out of providing social housing wasn't for Tory reasons, but because it was too much cost in management of properties and debts.That very much sounds like the type of arguments that the Tories put forward in the 1980s to justify selling off their social housing stock.
I personally take the view that the State should be agnostic on tenure. There are also societal benefits to having a strong, professionally managed PRS sector, which is the norm on the continent.
It has always been the case that a significant proportion of our population will never be able to afford to buy a property. Should those folk be required to provide a subsidy to their better off neighbours that can afford to buy?
The same policy was pursued in Ireland which everyone forgets! More social housing was sold than built in the 1980s in Ireland. Again, this policy may have gone too far but the general principle was not a bad one. People owning a house have a greater stake in their own community which has positive social benefits.That very much sounds like the type of arguments that the Tories put forward in the 1980s to justify selling off their social housing stock.
I fully agree and never claimed otherwise! It's not an either/or.here are also societal benefits to having a strong, professionally managed PRS sector,
This is a myth. Ireland's tenure patterns (68% OO, 20% PRS, 12% social in 2022) very close to EU averages below which are for 2018.which is the norm on the continent.
I disagree. A healthy PRS is very important especially for people in the early phase of their career. However I think there are social benefits to owner occupancy that the tax system should provide moderate support for. For me the current situation (CAT exemption for your PPR and help-to-buy) is probably already too generous and I don't in the slightest support any revival of mortgage interest relief.I personally take the view that the State should be agnostic on tenure.
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