NESC Calls For New Land Tax To Be Levied In Ireland

by Jason Gorringe, Tax-News.com, London

30 March 2004

A body advising the Irish government on economic and social issues is proposing in a forthcoming report that a tax based on the value of land should be levied to counter problems in the housing market.

The central recommendation of the National Economic and Social Council's report is the creation of a new ‘site value tax’, to be based on the value of the site, rather than the value of land and buildings. Such a tax would apply across the board to all types of properties including residential, commercial and development land.

The NESC is hoping that the existence of a site value tax would encourage property-owners to release land for housing development earlier. The body hopes that by making more land available for new housing, prices in Ireland’s overheated property market would be forced down.

The report states that a site value tax levied at 1% would cost the ‘typical’ homeowner living in a property worth EUR300,000 around EUR1,000 per year.

Should the government fail to implement the tax, then the NESC is calling for the introduction of a full property tax on second homes, in addition to the abolition of mortgage interest tax relief, which the Council argues merely serves to inflate property prices.

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