The new household tax in Ireland is a recipe for disaster, reminiscent of the poll tax in Britain that prompted riots 21 years ago.
Just confirmed by the minister for the environment, Phil Hogan, it will initially be set at €100 (£88) a year for two years, starting next January. That's not a lot when you consider in London pay more than every single month in council tax.
But the point is the Hogan tax is a flat tax, not based on ability to pay or on a householder's technical wealth, measured in assets such as the size and location of a house.
And as Margaret Thatcher found to her cost, that really does not sit will with the electorate.
A central policy of the Conservative party's winning 1987 general election manifesto, the poll tax, was designed to replace the old rates system and was levied on individuals rather than properties. It was supposed to increase accountability. But its introduction met with fierce resistance among some sections of the public and eventually led to protest across Britain culminating in riots in Trafalgar Square in 1990 when up to 3,000 demonstrators turned on police, attacking them with bricks, bottles and scaffolding poles. More than 100 people were injured, 45 of them police.
But at the end of the year Thatcher's successor John Major pulled the tax and replace it with a council tax, a tax based on property valuation which still exists today.
This should be a sombre message for Hogan - the riots happened just as the tax was being introduced across England (it was introduced in Scotland earlier). And even though €100 is less than €2 a week, Ireland's flat tax could be a similar lightning rod for protests among those already squeezed by higher tax and lower pay.
"It's a poll tax, for two reasons. One, Ireland has one of the highest home ownership rates in Europe at something like 80% and secondly it's a flat tax. Flat taxes were denounced as stupid 300 years ago. It's the most regressive form of tax you can have and in terms of taxation possible it's a very bad idea," says Limerick University economist Stephen Kinsella
As he says, the devil is in the detail. There are exemptions but not that many. The growing number of householders in mortgage arrears will have to pay as will pensioners and it goes without saying that some pensioners will easily afford €100 a year while others won't.
The government will do well to remember that grey power forced the former taoiseach Brian Cowen into an embarrassing climbdown over controversial plans to abolish automatic free healthcare for the over-70s.
The minister for the environment says the tax is an interim measure, set at the lowest possible level, and will hold for just two years when a new water tax and some other form of property tax is introduced. But this is predicated on systems being in place to make that possible - water meters in every home, a register of house sale prices and the introduction of postcodes in Ireland, which Kinsella describes as "the absolute bedrock" of a fair property tax.
So there's a good chance that the flat tax will slowly rise and will last longer than two years.
If history is anything to go by, it could last a lot longer than two years. After all, the deposit interest retention tax, better known as Dirt, was a temporary tax on savings introduced in the 1980s. It was designed to reduce tax evasion on unearned income and still exists.
Already it's proving to be a bit of a lightning rod for the left.
The United Left Alliance's Richard Boyd Barrett has already predicted the tax could quickly rise to €500 a year and says it will plan a national boycott.
He's old enough to remember the launch of the Dirt tax which has crept up to a tidy rate of 27%.
Sinn Féin's Aengus Ó Snodaigh has also hit out at its "seeping nature" saying would affect some of the poorest families in the country.
The government has dismissed Boyd Barrett's efforts to organise a boycott, pointing out it is obliged to introduce the tax as part of the IMF/EU programme and to continue to fund local services as street maintenance, waste services, libraries, park maintenance and leisure facilities.
Time will tell.
by Lisa O'Carroll taken from http://www.guardian.co.uk/business/ireland-business-blog-with-lisa-ocarroll/2011/jul/27/property-tax-ireland-poll-tax
Just confirmed by the minister for the environment, Phil Hogan, it will initially be set at €100 (£88) a year for two years, starting next January. That's not a lot when you consider in London pay more than every single month in council tax.
But the point is the Hogan tax is a flat tax, not based on ability to pay or on a householder's technical wealth, measured in assets such as the size and location of a house.
And as Margaret Thatcher found to her cost, that really does not sit will with the electorate.
A central policy of the Conservative party's winning 1987 general election manifesto, the poll tax, was designed to replace the old rates system and was levied on individuals rather than properties. It was supposed to increase accountability. But its introduction met with fierce resistance among some sections of the public and eventually led to protest across Britain culminating in riots in Trafalgar Square in 1990 when up to 3,000 demonstrators turned on police, attacking them with bricks, bottles and scaffolding poles. More than 100 people were injured, 45 of them police.
But at the end of the year Thatcher's successor John Major pulled the tax and replace it with a council tax, a tax based on property valuation which still exists today.
This should be a sombre message for Hogan - the riots happened just as the tax was being introduced across England (it was introduced in Scotland earlier). And even though €100 is less than €2 a week, Ireland's flat tax could be a similar lightning rod for protests among those already squeezed by higher tax and lower pay.
"It's a poll tax, for two reasons. One, Ireland has one of the highest home ownership rates in Europe at something like 80% and secondly it's a flat tax. Flat taxes were denounced as stupid 300 years ago. It's the most regressive form of tax you can have and in terms of taxation possible it's a very bad idea," says Limerick University economist Stephen Kinsella
As he says, the devil is in the detail. There are exemptions but not that many. The growing number of householders in mortgage arrears will have to pay as will pensioners and it goes without saying that some pensioners will easily afford €100 a year while others won't.
The government will do well to remember that grey power forced the former taoiseach Brian Cowen into an embarrassing climbdown over controversial plans to abolish automatic free healthcare for the over-70s.
The minister for the environment says the tax is an interim measure, set at the lowest possible level, and will hold for just two years when a new water tax and some other form of property tax is introduced. But this is predicated on systems being in place to make that possible - water meters in every home, a register of house sale prices and the introduction of postcodes in Ireland, which Kinsella describes as "the absolute bedrock" of a fair property tax.
So there's a good chance that the flat tax will slowly rise and will last longer than two years.
If history is anything to go by, it could last a lot longer than two years. After all, the deposit interest retention tax, better known as Dirt, was a temporary tax on savings introduced in the 1980s. It was designed to reduce tax evasion on unearned income and still exists.
Already it's proving to be a bit of a lightning rod for the left.
The United Left Alliance's Richard Boyd Barrett has already predicted the tax could quickly rise to €500 a year and says it will plan a national boycott.
He's old enough to remember the launch of the Dirt tax which has crept up to a tidy rate of 27%.
Sinn Féin's Aengus Ó Snodaigh has also hit out at its "seeping nature" saying would affect some of the poorest families in the country.
The government has dismissed Boyd Barrett's efforts to organise a boycott, pointing out it is obliged to introduce the tax as part of the IMF/EU programme and to continue to fund local services as street maintenance, waste services, libraries, park maintenance and leisure facilities.
Time will tell.
by Lisa O'Carroll taken from http://www.guardian.co.uk/business/ireland-business-blog-with-lisa-ocarroll/2011/jul/27/property-tax-ireland-poll-tax
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