Household Charge: Republic’s government faces into most difficult period of term, so far

I was in conversation with a news anchor from France 24 François Picard the other day, and he asked me what news I had from my part of the world… I said, plainly enough, the same story we get every summer for three months…

He replied in heart beat, ‘ah, the marching season‘…

However in the other part of the island things these days are much more epic and more serious… we have crisis in part because our politicians don’t what else to talk about in the public, they have crisis, because at the end of the day they have months to feed…

Noel Whelan notes just how difficult it is to make the transition from long term fiscal vulnerability to security in hellishly short order when it requires people to shell out money for things they currently get ‘for free’. He notes:

…the Government is left trying to introduce a property tax not as a tax reform measure but crudely as additional taxation. To implement the requirements of the bailout deal and to close the enduringly large gap in the public finances, the introduction of a property tax has become a question of fiscal necessity rather than one of economic or political preference.

In seeking to introduce a property tax, the Government still has to contend with inherent opposition to such a tax, arising from modern Ireland’s peculiar attachment to home ownership (and in the boom years, for many, an attachment to second-home ownership). The Government now, however, must also contend with, for many, an inability to pay more tax irrespective of what form it takes.

Of course the re-introduction (after more than 35 years of absence) of local taxation could also have a regenerative effect on democracy at county level as raising new revenues…

But, as ever, the Opposition is not only not playing ball, it is determined, as ever to make the best of the government’s discomfiture, with parties of the left inadvertently running to the aid of owners of the biggest properties.

The political difficulty is exaggerated by the existential economic reality (which tends to have the last word in Irish politics). Whelan again:

It is difficult to sell the concept of a tax based on property valuation at a time when there is no functioning property market. Property tax systems are supposed to be redistributive in that those with more asset wealth pay more.

Nowadays, however, those who appear to have the largest assets are, in fact, those most laden with property debt and those left with negative equity.

Added to that is the sense of injustice many who borrowed to pay large stamp duty bills when they bought their homes will now feel if they have to pay an annualised tax as well.