Irish Property Tax Probable, Just Not This Year

by Robert Lee, Tax-News.com, London

27 August 2009

Speaking on RTE on August 23, Irish Minister for Finance Brian Lenihan hinted that the forthcoming December budget would not include a property tax, although he noted that there remains room for an increase in taxes on real estate at a later date.

Stating that “the burden of taxation in Ireland is already high enough”, Lenihan signalled that he would be erring towards the Bord Snip report’s recommendations on retrenchment measures over the tax hike proposals expected to be included within the forthcoming Commission on Taxation’s report, to be received by the end of the month.

Measures that are expected to make an appearance in the Tax Commission’s report include a carbon tax, a top priority for Lenihan, an increase in water charges, yet to be ruled out, and a self-assessed property tax, which has been criticized by the opposition and is being examined by the government.

Irish Prime Minister Brian Cowen has informed that the proposal for a property tax to replace stamp duty tied to property sales was “not a done deal". He told the Sunday Independent that while the government was “not wedded” to the property tax it was “prepared to take the decisions that need to be made if that is what is deemed necessary,” noting that “[Ireland] has very low taxes on property, if any”.

“There are a lot of difficult political decisions down the line,” he said.

"People are going to have their say in terms of what the position should be. But at the end of the day, we have to close the gap between what taxes are coming in and what is being spent. If we don't do that we put the whole future at risk,” he emphasized.

The report from Bord Snip, received in July, advocates that the government reduce welfare spending by EUR1.8bn. Public sector wages are also to be reviewed when the government convenes to discuss the December budget in September.

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