Tuesday, August 28, 2012

Property Tax Proportionality and Sustainability


Property Tax

Recent reports suggest the Irish Government are planning a property tax that could place a burden on the average household of between €500 and €900 per year.

Joined-up-thinking, on the other hand, might suggest that a property tax should be proportional to income.

So, for instance, a TD (member of the Irish Parliament) on a basic of €93,000 plus their embarrassingly high levels of allowances and expenses that comes to €123,000, should pay 3 times the amount that a person earning €40,000 is asked to pay, and 6 times that of someone on €20,000.

Earn or Own More - Pay More

A High Court judge on €240,000 should pay no less than 12 times what a person on €20,000 is expected to pay for a similar type of property.

If the rate was set at €100 per year for a household on €20,000. The High Court judge's household should be charged €1,200 for a similar property.

If this type of proportionality and ethical balance was to be generally achieved, there would be much less resistance from the general population. Unfortunately the opposite has almost always applied.

In the much maligned Black Economy there is a high degree of proportionality in pricing. The known rich will often be charged a good deal more. There is lot to be said for some aspects of a black economy, without it in the 1980ies, a time of 35% VAT, much of the Irish retail and service industry would have ground to a halt.

Bottom line, the rich are NOT paying their fair share, The imbalance will eventually cause a tip-over effect.


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