7 months to rescue the rates?

Tommie Gorman witnesses a middle class revolution in University Street. If Peter Hain’s reforms remain intact by the next rate year (beginning April 2007) some will face rises of 50%. Not surprisingly all of the local parties are against it. Alex Maskey got some applause when he said “we should not be looking to go to Downing Street, we should be looking to go up the hill there and few miles away and take the decision ourselves”. But the biggest applause was for Robert McCartney who said he would pay according to this year’s rate, + 10%, and that he would make sure he led the way if it came to prosecution.If this were a game of Chess, you’d have to concede that this is a sharp move by Hain to incentivise the disengaged middle classes to exert constituency pressure on the DUP, in particular, to get back into government. There’s another little detail hidden in there that would allow for dwellings to be re-rated on an annual basis, so that the figure you pay rises (or falls) with the value of your house. That’s not something that even pertains in GB, where local rates are generally considerably higher than Northern Ireland.

Indeed, it’s hard to see any democratically elected government contemplating such a potentially ruinous system. So, it may well prove decisive in concentrating minds.

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  • Peter

    You gotta laugh. It seems like every evening the local news has a self satisfied article on how much property values have increased. Now the screaming has begun once the bills have come in. Somehow I’m not gonna lose much sleep about a large rates bill for someone living in a $1m house in south belfast.

    The rates issue might now slow down the property bubble which will be a good thing.

    People should pay rates based on their ability to pay and their house value seems to be as good a metric as any. The govenment should reciprocate by ensuring that future rises are capped and that counsils have to justify larger rises to an independently elected authority who can ensure that rate payers are getting value for money.

  • Crataegus

    Peter

    People should pay rates based on their ability to payYES and their house value seems to be as good a metric as any.UTTERLY WRONG

    What really takes me to the fair about our local parties is if I recall correctly an agreement they reached about funding. What were the consequences of that agreement? Nice to be out of office allows one to be outraged.

  • Peter

    Crataegus “UTTERLY WRONG”

    Ok what would you suggest?

  • Flags

    Why should ew pay Council Tax at all?
    Next they will want me to pay tax on my benefits!

    Yours,
    the incensed flags

  • Crataegus

    Peter

    Tax income not the USE OF property. Don’t forget you may not own the property but rent and still be liable for the rates! This is more obvious in the business sector. Also four earners in one house and next door a pensioner etc etc We have been through all this before on other threads.

  • Peter

    So granny in a 1M house pays nothing while a single income parent in a terrace/estate pays. Not such a great idea to tax income.

    Oh and the reason you get 4 earners in one house is because only one of them can afford to buy a house.

  • nmc

    It’s a f*cking disgrace. I get my bin emptied, and that’s the sum total of services received from Belfast City Council.

  • Alan

    I was at the meeting. Apart from being very badly chaired, there are a few key points arising from the meeting.

    Firstly, house prices in South Belfast owe more to speculation than utility value. It is crucial that landlords are made to pay – and that areas of high values and high levels of HMO’s receive some recognition. Otherwise the rates reforms will empty areas of families and make a nonsense of the planning services recent HMO strategy.

    Secondly, the political parties who attended were all bar one – and Bob McCartney – dealing with the question of rates and public finances in a serious way. Bob was calling for people to pay their current rates plus 10% and said that in court his defence could be their defence – without stopping to consider whether they would be able to pay their fines.

    Despite Bob McCartney’s irresponsible expedition into the land of radicalism and rates refusal, the meeting was looking for a Fair System. There is an opportunity to develop joint work between political parties and the committee.

  • Crataegus

    Peter

    Ah you covet grannies house, can’t wait till she passes on!

    Mind you not many grans I know live in £1000000 houses, but I know lots of people in adjoining houses with different incomes per household and I have known quite a few businesses that have been forced into bankruptcy partly because of the rates on the property they rented.

    Shoving Gran into sheltered housing isn’t going to get you a house and there aren’t enough sheltered houses either.

    IF you want to tax property tax the capital gain on the appreciation in value as you would with business property. This would dramatically reduce the amount of money in the housing market and would make property speculation and buy to let a lot less attractive.

    But in the end we simply are not building enough dwellings of most types.

  • Crataegus

    sorry granny’s not the plural above

  • Rory

    But the biggest applause was for Robert McCartney who said he would pay according to this year’s rate, + 10%, and that he would make sure he led the way if it came to prosecution.

    Oh I’d applaud McCartney as well if I lived in NI. Indeed I would cheer him to the rafters all the way to the gates of prison. What I would not do however is follow him. I’ve had a wee bit too much bitter experience of “respectable” politicians leading the common people into defying the law and then they themselves always stepping back from the brink just as the campaign begins to bite and watch from the sidelines as their followers are penalised or imprisoned, indeed in some case actively participating in their prosecution.

    We all surely recall Austin Currie, the SDLP and the Rent and Rates strike against internment and here in Britain the left Labour Party led the no-payment campaign against the Poll Tax and then dropped out and in places like Haringey where the left councillors had been most outspokenly militant they were now most ardent at persecuting those who took their idealism to heart, including muggins here who was sentenced to six months for his troubles.

    Walk softly, boys and girls, and carry a big stick.

  • willis

    Jeez

    What with leading a one man campaign to save the discredited 11+ and now the Rates, Thank God for Baker shop Bob!

  • Dread Cthulhu

    Peter: “People should pay rates based on their ability to pay and their house value seems to be as good a metric as any.”

    Actually, in a bubble market, its a pretty piss-poor metric. Housing prices rocket upwards, leaving the home-owner with a suddenly very valuable house, a large tax bill and lacking the wherwithal to pay (i.e. actual ‘liquid’ cash) to pay the usurious rate.

    Sort of stupid system — tax the fellow so much on his house that the only way to pay the tax is to sell the house.

    Peter: The govenment should reciprocate by ensuring that future rises are capped and that counsils have to justify larger rises to an independently elected authority who can ensure that rate payers are getting value for money. ”

    I scary part is that you likely think the above is a possibility…

  • Peter

    Crataegus “Ah you covet grannies house, can’t wait till she passes on!”

    Nothing would depress me more than living in the traffic clogged streets in South Belfast.

    While I maintain that rates based on house/land prices is a better option than a local income tax another alternative is the use of a local sales tax as is in place in parts of N.America. The more products you use/purchase the more tax you pay. The higher price you pay for a product the more sales tax you pay. Dunno how web based purchasing fits into this model though?

  • Peter

    Dread Cthulhu: “Actually, in a bubble market, its a pretty piss-poor metric. Housing prices rocket upwards, leaving the home-owner with a suddenly very valuable house, a large tax bill and lacking the wherwithal to pay (i.e. actual ‘liquid’ cash) to pay the usurious rate.”

    I think you don’t really have a clue as to how rates are set and naively believe that they will simply go up in line with house prices. Please tell me you don’t actually think that if average house prices go up by 30% in Belfast in 2007 the council will increase rates by an average of 30%. What’s the council going to do with all the extra cash. Gold bin lorries?

    Some people win and some people will lose. Isn’t it better that someone who can afford to purchase as house pays more than someone who can’t? Is’t it better that property speculators and people who have benefited from the price boom pay more than those who can’t even get on the ladder.

  • Dread Cthulhu

    Peter: While I maintain that rates based on house/land prices is a better option than a local income tax”

    It actually isn’t. An income tax addresses the wherewithal to pay issue neatly by taxing liquid income, where, in a speculative market, a property tax does not.

    Peter: “another alternative is the use of a local sales tax as is in place in parts of N.America. The more products you use/purchase the more tax you pay. ”

    Actually, in practice, I think you will find this ends up being something of a regressive tax, insofar as the poor, who, like as not, have to spend a much greater percentage of their income to support themselves, find a far greater percentage of their income taxed, whereas an income tax can be progressively graduated, such that the more a person makes, the greater they are taxed. This also addresses the wherewithal to pay issue.

  • Dread Cthulhu

    Peter: “I think you don’t really have a clue as to how rates are set and naively believe that they will simply go up in line with house prices. Please tell me you don’t actually think that if average house prices go up by 30% in Belfast in 2007 the council will increase rates by an average of 30%. What’s the council going to do with all the extra cash. Gold bin lorries? ”

    To address your “points” in reverse order, I certainly wouldn’t put it past government to dump excess money down some useless project — although golden bin lorries might actually have some utility and a high residual value, thus disqualifying them — governments wouldn’t be so smart. Windfalls in tax revenues are rarely used wisely by governmental bodies.

    And no, I did not expect that there would be a 30% rise in rates, which is why I spoke in broad generalities. This does not change the fact that basing a tax on a metric that rises and falls arbitrarily vis-a-vis the ability of the taxed to pay is a foolish notion, particularly in a speculative market. Your sales tax idea is marginally better, but regressive in nature, disproportionately impacting the poor.

  • Dread Cthulhu

    Peter: “Some people win and some people will lose. Isn’t it better that someone who can afford to purchase as house pays more than someone who can’t?”

    Ah, but house prices are an independent variable, wholly unrealted to a person’s ability to actually pay the tax.

    Peter: ” Is’t it better that property speculators and people who have benefited from the price boom pay more than those who can’t even get on the ladder. ”

    And they should be taxed, when that benefit is realized, and not when it exists solely on paper. As Crataegus suggested, tax the gain on capital when that gain is realized.

  • mook

    Landlords are getting a large whack of income from their let houses every month. Should this not be directly taxed?

  • Dread Cthulhu

    mook: “Landlords are getting a large whack of income from their let houses every month. Should this not be directly taxed? ”

    Another decent suggestion… wherewithal to pay addressed… tax resides with the owner of the property…

    Makes sense.

  • seanniee

    If you want to stay with Britain ,Pay your way.

  • Peter

    Dread Cthulhu:”Ah, but house prices are an independent variable, wholly unrealted to a person’s ability to actually pay the tax.”

    No they are not. It’s pretty obvious wealthy people purchase expensive houses. Are you saying Malone road is a hotbed of the working class being forced out of their properties by the rates hike?

  • Dread Cthulhu

    Peter: “No they are not. It’s pretty obvious wealthy people purchase expensive houses. Are you saying Malone road is a hotbed of the working class being forced out of their properties by the rates hike? ”

    No, what I am saying is your recommended metric is not a useful basis of determination. For starters, until the house is sold, its a paper gain — the price appreciation on the property does not represent a greater ability to pay on the part of the person living in the house. You entire argument is based upon a premise that is not universally true.

  • Peter

    Dread Cthulhu:No, what I am saying is your recommended metric is not a useful basis of determination. For starters, until the house is sold, its a paper gain—the price appreciation on the property does not represent a greater ability to pay on the part of the person living in the house.

    I don’t think I’ve said that house appreciation is a good metric on which to base rates. I do believe that house price is a good metric and a good indicator of the owners ability to pay.

    Landlords already have to pay capital gains tax on selling their properties so I don’t know why you are barking up that tree since what we are talking about is rates.

    As I’ve said earlier local income tax will benefit speculators and landlords who won’t have to pay rates on their multiple dwellings. The self employed and wealthy will in addition find tax avoidance loopholes as they currently do passing the burden to those least able to afford the tax. The income tax system as it stands with caps a 40% is already unfair do you expect a local version to work any better.

  • Crataegus

    Mook

    Landlords are getting a large whack of income from their let houses every month. Should this not be directly taxed?

    Perhaps I have picked this up wrongly, but rental income is taxed more tightly than other income and there are limits to what you can set against it? Currently the buy to let market is driven not by the income on rental, as this often does not finance the loan, but an anticipation that the property will itself increase in value. There are going to be a lot of people with burnt fingers if this attitude continues.

    The big tax break in property is the tax exemption on the capital gain on your primary residence. It is a loophole that I abused mercilessly in my youth. Another is that rates are not liable on empty residential property or unused land, this allows a speculator (as opposed to developer) to sit on land and property with impunity in the anticipation of eventual increase. We also need to consider a windfall tax on land that is rezoned.

    Peter

    If you want to tax fairly tax income as that is often the fairest measure of ability to pay. If you want to tax Capital assets and wealth do so when the benefit is realized on sale or transfer as many assets simply cannot be disposed of without major upheaval. If you want to take money out of the property market tax the capital profit of houses on sale or unused dwellings and land or rezoned land.

    Rates cause all sorts of distortions that are unfair. It is a regressive tax which penalises improvement and rewards dereliction.

    We need to look at the supply side and take some positive action to ensure we build more dwellings. If there were enough houses in the first place it would take a lot of heat out of the property market though there would still be hot spots. If some elderly fellow is forced out of his million pound house then how does that benefit you find an affordable house.

    By the way lots of affordable houses in Tigers Bay strange that market forces haven’t made much of an impact in such places.

    Dread Cthulhu

    You are a lot better on tax than you are on foreign policy.

  • Dread Cthulhu

    Crataegus: “You are a lot better on tax than you are on foreign policy. ”

    You’re only saying that because I’m agreeing with you… 😉 You’d be suprised what you learn in a Accountancy Master’s program.

    Peter: “As I’ve said earlier local income tax will benefit speculators and landlords who won’t have to pay rates on their multiple dwellings.”

    IOW, you wish to target teh speculators, rather than manage a fair tax policy… glad to see class warfare isn’t dead.

    Peter: “The self employed and wealthy will in addition find tax avoidance loopholes as they currently do passing the burden to those least able to afford the tax. The income tax system as it stands with caps a 40% is already unfair do you expect a local version to work any better. ”

    Properly managed, yes. While I concede that any tax scheme is vulnerable to abuse — ask me about some of the gems I’m aware of — your ulterior motive — using house price as a stalking horse for a little class warfare, will create other disparities, which will undermine the essential “fairness” of the tax. You end up with one of two scenarios — if you use the latest sales price, you get wildly varying tax rates and disparities on the tax due on similar property holdings. If you go with a general assessment, long-time property owners in “transitioning” areas will be impacted.

    A graduated tax, one with an appropriate floor, so that the truly poor are not unduly impacted, and an appropriate top rate, so that economic activity is not discouraged, would be the ideal. Income is perhaps the best measure of a tax-payers wherewithal to pay, making it the ideal metric.

  • Peter

    Dread Cthulhu: IOW, you wish to target teh speculators, rather than manage a fair tax policy… glad to see class warfare isn’t dead.

    I’ve no problem with targeting the scourge of property speculation and forcing the most wealthy to pay more. You can use the tired old cliche of class warfare if you wish.

    “Properly managed, yes.”

    Ah at last a phrase to get you out of the problem. Can I thus recommend a “Properly Managed Rates system based on house valuation” as the way forward.

    How long have we been waiting for a properly managed and fair income tax system?

    Thanks for reminding me that only the wealthy can show entrepreneurship so we better not tax them too highly.

  • Dread Cthulhu

    Peter: “Ah at last a phrase to get you out of the problem. Can I thus recommend a “Properly Managed Rates system based on house valuation” as the way forward”

    Not likely, for the reasons I’ve already pointed out.

    Peter: “Thanks for reminding me that only the wealthy can show entrepreneurship so we better not tax them too highly. ”

    How many poor men sign paychecks?

  • rapunsel

    Christ– it’s all getting a bit technical! Overall I’m with Cratageus on this one– the rates should not be based on the value of the property but on the household income– I’d say however if such a system was mooted then we’d have the same middle class south Belfast people as were at last night’s meeting protesting against that too. Likely result would be that the in most cases the same people would still be paying more. Lets face it noone ( even nice liberals like myself) really wants to pay more tax whatever the system designed to collect it. The wealthy(ier) will always be opposed to the redistribution of wealth. I lived in Castleragh Council area until recently and to be honest I was very unimpressed with the level of servics provided by the Council. I’m not clear as I would like to be on how rates are collected and disributed to council areas and what the new system is in the context of the RPA but would it not be an option to collect all rates centrally and allocate back to councils taking into account factors such as population, access to services etc. In fact why have rates at all — why not just factor it into the tax system?

  • Comrade Stalin

    The people who moan the most about the tax burden are generally people who are quite well off. I do have a degree of sympathy for pensioners suddenly finding their tax burden rising, but I’ve not got that much sympathy for the rest.

    Particularly galling is that silly call to arms from Bob. It’s funny how when it comes to unionists the shoe is so much on the other foot these days.

  • Reader

    Comrade Stalin: but I’ve not got that much sympathy for the rest.
    Do you regard a tax on a specific capital asset as being fairer, or less fair, than a local income tax? Would you advise people to let the outsides of their property fall into disrepair to save on rates bills? If my children can reduce house prices in the neighbourhood of my house, should I tell them to go for it? Should people be expected to sell their homes when they reach retirement age?

  • Daisy

    I find it ludicrous and insulting that we should be held to ransom by the politicians once again. This time we’re told that if we want the rates sorted, they’ll have to get their act together and come to agreement. A foolproof plan! Except many of us can’t afford the new rates, especially those of us who earn just enough so we don’t qualify for any benefits.

    I’m actually in favour of paying rates (except for the building of large, soon to be disused council offices which seem to be springing up everywhere) as the services we get are essential. I don’t like being robbed blind, however and I most certainly don’t like being blackmailed.

  • sean farren

    Since more than fifty per cent of ratepayers will see reductions or no increases in their rate bills McCartney’s advice is unlikely to receive widespread support.

  • Alan

    I think it’s crazy to agree cuts in rates when we are essentially having to agree the rate for an increase.

    Let’s have a situation in which all rates continue to be levied at the current level, with the re-rating used to determine the level of increase in rates. You can then include significant rebates etc for pensioners.

    Living in South Belfast, I also want the landlord’s hit hard, not left paying nothing as at present. They are continuing to distroy our communities.

  • Is it not better to charge rates according to the households useage???
    Simple theory, you pay for what you use, and if you can’t afford to pay, cut down on your useage and live within your means.

    From some of the nonsense posted by leftists and communists on this thread, it appears to me that the rates system is being used as some sort of wealth distribution tool. Although I’m not surprised given the current propensity of the Labour cabal to punishing success through taxation. Roll on the tories I say!!!

  • Comarde Stalin

    “The people who moan the most about the tax burden are generally people who are quite well off”

    ie those that actually pay for the feckless and workshy.

  • Churchill

    Sorry, the above should read “redistribution” instead of distribution.

  • Crataegus

    Pakman

    On the subject of the feckless and work shy, I have spent a depressing morning looking at 6 new apartments that are for sale. By new I mean about 5 years old. Owner died and son is selling as he has had enough. The occupants were on benefits and I assume the former owner was paid rent directly. One of the flats is still occupied by a single mother. I assume the son is having problems removing her despite what he was saying but she was probably the only good tenant there was.

    Let me say I cannot imagine how any group of people could possibly cause such damage and how they would create conditions like this to live in. One of the flats had rubbish right across the floor to a depth of about 400-600mm I didn’t go in to take closer look, and a second had dried in cat and dog dirt trampled into the carpet (at least I think that is what it was judging by the smell). The rest suffered from what could only be described as wanton vandalism. Doors with holes where someone had put their foot through them, bits carved out of the window sills, holes knocked through stud walls that sort of thing, and the filth was unbelievable! Rubbish all over the place, bins set on fire, electrical fittings removed, one of the flats had the sanitary fittings removed and the water allowed to flow into the flat below. It was utterly horrendous.

    I was wondering where these miscreants had moved on to and why we should attempt to house such people. I reckon that it will take say £150.000 – £200,000 to make good the damage. This is money that could be better spent building dwellings that people need.

    Just as a matter of interest is there any effective redress against people like this. They have no money so no point trying to track them down and take them to court.

    One of the worst I have seen in years.