New Dail / New Taoiseach

efanton

is_that_so wrote: »

Th Rent freeze idea potentially puts two concepts of the constitution up against each other, common good and personal rights and would in all probability end up in court. Commentary here from the ESRI too. The solution as we all know, is improved supply
https://www.thejournal.ie/should-a-rent-freeze-be-introduced-in-ireland-4887837-Nov2019/

This second piece is a balanced legal piece on both sides of the argument.
https://www.thejournal.ie/readme/rent-freeze-4929058-Dec2019/

Thanks for that, much appreciated.

So a rent freeze is not unconstitutional but could be challenged.
Being that it is time limited, I couldn't see the courts throwing it out.
Having said that, surely the sensible thing to do is to request that the president tests the bill.


There are two potential ways round this, thinking about it, if the government was not prepared to ask the President to test the rent freeze legislation
All the government need do is add a second tax rate on profits from rent. If rent is more than X amount it is charged at a different rate. If any addition profit is going to get swallowed in tax there would be little or no point in landlords raising rents. Then in a few year time scrap the additional taxation. It would be an extremely clumsy and heavy handed measure though.

The problem really is more to do with existing taxation.
The government is already squeezing the housing market to strangulation point, heavy taxes on house sales and new builds, and heavy taxes on rental income.
The other alternative would be to drop the taxation rate by a small amount with the understanding that rent controls could be introduced.
Better still drop it permanently. We need more housing in the private sector so that there is a reasonable supply for those that wish and can almost afford to buy a home.

Even if the Sinn Fein's home building policy was introduced by who ever forms the next government there is still going to be a two or three year lag for them to have an effect.

The country simply cant continue the way it is.
The current government is spending well over 3/4 billion euros a year at the moment renting private property for social housing use (612 million for HAP, 170 million for emergency housing).
Yet people are having fits that SF wants to spend 250 to 300 million a year building homes. (current home building budget + 6.5 billion proposed spend by SF amortised over 25 year)
Over those 25 years the exist policy of renting private property for social housing use would cost the state close to 19 billion and that's assuming the rental cost to the government never rises. That would work out over 3 times as much as building the 100,000 homes

Johnboy1951

Their home might well be worth €500,000 but does not generate income .... in fact it costs to maintain.

Geuze wrote: »

Please note that this statement is incorrect.

You are incorrect.
There is no generation of income in abiding in one's own property.

The concept of imputing income is logically extensible to any service people perform for themselves, such as cooking their own meals, washing their own laundry, or even bathing themselves.

So I guess there should be extra tax on all persons who perform their own caring functions and do not employ someone else to do them.

Yeah, real sensible and practical.

Princess Consuela Bananahammock

Geuze wrote: »

It is internationally recognised that houses provide flows of imputed income to their occupants.

Tell me, what are you counting as "imputed income"? And how are you calulating monetary values of said incomes?

Is your claim is that is sensible to tax a percentage of the property based on this imputed income?

Should ALL citizens have their imputed income should taxed? And how do you calculate the levels of taxation on said incomes of non-home owners?

Sam Russell

efanton wrote: »

Thanks for that, much appreciated.

So a rent freeze is not unconstitutional but could be challenged.
Being that it is time limited, I couldn't see the courts throwing it out.
Having said that, surely the sensible thing to do is to request that the president tests the bill.

Another approach would be a voluntary one.

Most landlords have a great fear of the tenant not paying the rent, and/or trashing the gaff, and then not being able to evict for years while the tenant applies to remain, while still not paying the rent.

If the landlords who agreed to this were given a guarantee that if they sign up to reasonable and fixed rents for a fixed number of years, the speed of eviction for non payment of rent or unsocial behaviour would have the errant tenant out within a month.

A second requirement would be that evicting a tenant for any other reason, such as selling the property, would be difficult. We would then see signs 'For Sale - Tenant unaffected'.

I think the force of law is needed though.

efanton

Sam Russell wrote: »

Another approach would be a voluntary one.

Most landlords have a great fear of the tenant not paying the rent, and/or trashing the gaff, and then not being able to evict for years while the tenant applies to remain, while still not paying the rent.

If the landlords who agreed to this were given a guarantee that if they sign up to reasonable and fixed rents for a fixed number of years, the speed of eviction for non payment of rent or unsocial behaviour would have the errant tenant out within a month.

A second requirement would be that evicting a tenant for any other reason, such as selling the property, would be difficult. We would then see signs 'For Sale - Tenant unaffected'.

I think the force of law is needed though.

What really needs to happen is for all laws regarding tenancies to be tore up and re-written.

When I had my flat in Prague my tenancy was for 2 years. There was a penalty clause in the contract. If I wanted to end the tenancy early I had to pay one week for every month still outstanding on the tenancy, and it was the same for the landlord, if he wanted to end a tenancy early he would have to pay me one weeks rent for every outstanding month on the tenancy.

Courts system over there was so much simpler for landlords. A case would take not much more than 6 weeks to be heard, but there would have to be compelling evidence, photo's, written affidavits from neighbours or the police.
It worked both ways, a landlord couldn't give any old lame excuse to end a tenancy as they can here, but in the case of tenants that stopped paying, damaged property or were nuisance neighbours, getting them out was relatively simple if enough evidence was put before the courts.

Myself and the girlfriend paid out of our own money to redecorate the place (with the landlords consent). With long term tenancies it was normal for that to happen, Tenants felt that it was their permanent home and therefore took pride in their home.



the biggest change that really needs to happen in Ireland are

Longer term tenancies that benefit both the landlord and the tenant.

Fixed pricing for the duration of a contract.

A court system where cases can be heard fairly rapidly, and where verbal testimony is not sufficient. Courts should be able to issue orders where deduction are made directly from salaries in the event of eviction.

Tenant should be automatically offered a new tenancy on the expiry of an old one, if rent is up to date and no damage do to property.



Make it so that both tenant and landlord benefit. But the important thing would be to get a courts system in place specifically for theses cases so that they are both fast and fair.

The way it works in Ireland everyone is trying to screw everyone else. The result is everyone eventually gets screwed so there is no trust.

Geuze

Johnboy1951 wrote: »

You are incorrect.
There is no generation of income in abiding in one's own property.

The owned house does not generate cash income, no.

It generates imputed income, i.e. a benefit, a housing service.


To be clear, I don't think we should return to taxing this imputed income, I think an SVT is the best type of property tax.

Princess Consuela Bananahammock

Geuze wrote: »

The owned house does not generate cash income, no.

It generates imputed income, i.e. a benefit, a housing service.


To be clear, I don't think we should return to taxing this imputed income, I think an SVT is the best type of property tax.

Ok so - just to clarifty - you're not advocating taxation of impuyed income (in whcih case, why bring it up?) and not advocating tax on owner's own lived-in dwelling?

charlie14

Geuze wrote: »

The owned house does not generate cash income, no.

It generates imputed income, i.e. a benefit, a housing service.


To be clear, I don't think we should return to taxing this imputed income, I think an SVT is the best type of property tax.

If the value of a house is regarded as imputed income and taxed as such, then doesn`t it follow logic that any expense that increases the value of that house should be tax deductible ?

Geuze

Princess Consuela Bananahammock wrote: »

Ok so - just to clarifty - you're not advocating taxation of impuyed income (in whcih case, why bring it up?) and not advocating tax on owner's own lived-in dwelling?

The first-best property tax is an SVT, which I would support.

However, it is difficult to implement, as most people can't separate their site value from their building value.

I suppose the second-best property tax is something like the LPT that we have, so I support that.

I don't know if economic theory supports the taxing of imputed income instead of LPT.

I'd say an LPT on the value is better?

https://www.ifs.org.uk/docs/adam_0311.pdf

https://www.ifs.org.uk/pr/mirrlees_sept11.pdf

Geuze

charlie14 wrote: »

If the value of a house is regarded as imputed income and taxed as such, then doesn`t it follow logic that any expense that increases the value of that house should be tax deductible ?

The asset value of a house is not an imputed income.

It's the annual flow of housing services you get from the house that is an imputed income.

Yes, mortgage interest I think was allowed as a deduction in the taxation of imputed income.

Princess Consuela Bananahammock

Geuze wrote: »

The first-best property tax is an SVT, which I would support.

However, it is difficult to implement, as most people can't separate their site value from their building value.

I suppose the second-best property tax is something like the LPT that we have, so I support that.

I don't know if economic theory supports the taxing of imputed income instead of LPT.

I'd say an LPT on the value is better?

https://www.ifs.org.uk/docs/adam_0311.pdf

https://www.ifs.org.uk/pr/mirrlees_sept11.pdf

So that's a "no" then.

jd1983

tobsey wrote: »

It’s a stupid idea from a so called left-wing party. Saving millionaires thousands to save average people 200. Property tax is a wealth tax and supported by every legitimately left-wing party in existence, because it lessens the income tax burden on workers.

It’s the exact same for water charges. SF know if they tell people they’re putting money in people’s pockets it’ll get them votes, even though the shortfall will have to be made up somehow and the easiest way is through income tax. All the parties try and buy votes but SF’s plans seemed the most unachievable of the larger parties.

I agree with you on property tax but not on water charges or at least not the attempt to introduce water charges. If the water infrastructure needs investment, then why on earth would you increase the running cost of the water network by hundreds of millions. Particularly in a country with an abundance of fresh water. The way water charges was brought in it was clear that the end goal was privatisation.

charlie14

Geuze wrote: »

The asset value of a house is not an imputed income.

It's the annual flow of housing services you get from the house that is an imputed income.

Yes, mortgage interest I think was allowed as a deduction in the taxation of imputed income.

That really does not make a lot of sense.
If my house is worth 300K and I spend a further 200K to raise the value to 500K, the property tax on my house increases, but the imputed income remains the same.
I do not see how Local Property Tax equates to imputed income in any manner

Geuze

charlie14 wrote: »

That really does not make a lot of sense.
If my house is worth 300K and I spend a further 200K to raise the value to 500K, the property tax on my house increases, but the imputed income remains the same.
I do not see how Local Property Tax equates to imputed income in any manner

In this case, as the house size/quality is bigger, then the annual flow of housing services would increase, so the imputed flow of housing services/benefits would increase.

BTW, maybe we are off-topic somehow, I apologise if so.

BTW, I am not arguing for taxation of imputed income.

Johnboy1951

Geuze wrote: »

In this case, as the house size/quality is bigger, then the annual flow of housing services would increase, so the imputed flow of housing services/benefits would increase.

To what services/benefits do you refer that could be estimated and taxed?

BTW, maybe we are off-topic somehow, I apologise if so.

BTW, I am not arguing for taxation of imputed income.

charlie14

Geuze wrote: »

In this case, as the house size/quality is bigger, then the annual flow of housing services would increase, so the imputed flow of housing services/benefits would increase.

BTW, maybe we are off-topic somehow, I apologise if so.

BTW, I am not arguing for taxation of imputed income.

If the house occupancy has not increased, then why would the imputed flow of benefits have increased ?
In fact why would these imputed flow of benefits be any greater in a house valued at 800k rather than a house valued at 300K even though the property tax is higher on one than the other.
As I have said, I cannot see where there is any correlation between the imputed value of a property and how property tax is charged.

Geuze

Johnboy1951 wrote: »

To what services/benefits do you refer that could be estimated and taxed?

The accomm/shelter that the house provides to the owner.

https://en.wikipedia.org/wiki/Imputed_rent

https://www.businessinsider.com/imputed-rent-hidden-tax-break-homeowners-2016-9?r=US&IR=T

The value could be estimated by the market rent, i.e. what then same property rents for.


https://journals.sagepub.com/doi/10.1177/0042098010377474

AndrewJRenko

Sam Russell wrote: »

Another approach would be a voluntary one.

Most landlords have a great fear of the tenant not paying the rent, and/or trashing the gaff, and then not being able to evict for years while the tenant applies to remain, while still not paying the rent.

If the landlords who agreed to this were given a guarantee that if they sign up to reasonable and fixed rents for a fixed number of years, the speed of eviction for non payment of rent or unsocial behaviour would have the errant tenant out within a month.

This is exactly the scheme that Dublin and other Councils did during the recession, where they guaranteed fixed rents to landlords, and the Council took responsibility for the tenants.


Are these schemes still going?

Sam Russell

Geuze wrote: »

The accomm/shelter that the house provides to the owner.

https://en.wikipedia.org/wiki/Imputed_rent

https://www.businessinsider.com/imputed-rent-hidden-tax-break-homeowners-2016-9?r=US&IR=T

The value could be estimated by the market rent, i.e. what then same property rents for.


https://journals.sagepub.com/doi/10.1177/0042098010377474

Was the (market) rental value the basis for the old rates system that existed before the system was abolished?

Johnboy1951

Geuze wrote: »

The accomm/shelter that the house provides to the owner.

Why not all the other benefits ....... such as the garden for growing your own spuds and cabages ...... the furniture as a furnished house is more costly than unfurnished to rent ?

Then of course the home would have to be treated like any other physical investment which could be depreciated year on year so the longer you owned it the less it would cost in imputed tax.
Taking that further then all services provided by 'the market' should be estimated ....... hair cutting, hair washing, cooking and serving meals etc etc etc.
If brought to a logical conclusion it very soon gets ridiculous.

I am not at all surprised you do not support the introduction of this type of tax.

efanton

property taxes simply do not work for many reasons.

Who decides what is the appropriate value of a proerty?
Just because you might own a house it is no indication of personal wealth, many homes are inherited. You might own a home worth 500k, but your income might only be 20k.
Also it dis-proportionally hits those that live in cities rather than rural areas simply because of location. You and myself might live in IDENTICAL homes but because one of us live in Dublin and the other in a rural area the tax rate would be significantly different. How could that possibly be fair?

The only fair system of funding services and facilities is general taxation. But for that to work the taxation system must be fair to start with and its not. There are high income workers paying significantly less tax than middle income workers because they are able to avail of tax breaks that a PAYE worker simply cant.
But having said that income taxation we currently have is still far fairer than any exiting or proposed property tax.

There is a reason why general taxation of income, profit or gain works and is the system used by almost every government in the world and that is that it is generally the fairest way for the state to extract taxation to fund services.
I see no point whatsoever in ANY form of property tax. If additional revenue is required to provide services governments should simply be honest about this and adjust general taxation levels.

Our taxation system is broke. SF had the right idea of bringing in a 3rd band, what could be debated is was it put in the correct place and are the thresholds set appropriately. I would argue that they got the threshold right (140k, even 100k), but could have raised the threshold for the middle band at the same time.
The existing system will always punish the middle income earner. If you want to take the pressure of the poor the middle income earner gets hit because the way to do that would be to adjust the existing threshold for top band. You cant simply adjust the threshold for the lower band because that results in lost revenue for the state that has to be made up for somewhere else.
If you want to take pressure of the higher income workers the middle income worker still get hit because the only way to do that currently is adjust the threshold for the top band. There is no way possible in the current system to adjust taxation so that benefits only the middle income earner.

With a 3rd band system it would be easy to target taxation measures that would affect the higher, middle or lower income earners separately.
For instance you could have a lower band taxed at 10% up to a value of 25k. That would widen the tax base but still ensure that the lower paid do still contribute in some way.
With a middle band of say 25% to earning up to 50k you could give some relief to the middle income worker.
But because the lower income worker are now paying some reasonable amount of tax the rate on the top band could now be reduced to say 40%.
Those thresholds might not work, but because it is a 3 band system it would be easier to adjust them so that taxation is more balanced and every worker including the lowest paid is paying some form of taxation.

So in summary I advocate no property tax whatsoever in any form, but instead a remodelling of our income tax system using a 3rd band.
I think the SF idea has legs, I just dont 100% agree that the threshold for the three bands were set properly, and adjusting the rates of the existing two bands was a missed opportunity that would have ensured a truly fair taxation system.
I would also weed out and get rid of as as many tax breaks as possible by adjusting the thresholds of the 3 bands to compensate for any lost/increased revenue

Topgear on Dave

Interesting. You would remove the "burden" of LPT off someone who may have inherited a house worth a few hundred thousand (that's wealth whether you like it or not) and then tax working people (PAYE suckers who are probably renting) at the lower end.

That's wild.

efanton

Topgear on Dave wrote: »

Interesting. You would remove the "burden" of LPT off someone who may have inherited a house worth a few hundred thousand (that's wealth whether you like it or not) and then tax working people (PAYE suckers who are probably renting) at the lower end.

That's wild.

Not really. A house is not worth a single cent until the moment you sell it.
If I gave you a cheque for 1 million euro that you were unable to cash would it be worth anything? Same principle, its only of value to you once money changes hands or it produces an income.

People dont get that. When they buy a house they think they are making a financial investments. Its not, it is however an investment for the security and well being of their family.

Its only when you buy a house with the intention that you will rent it out or sell it on for profit that it becomes an investment.

With regards the working suckers who pay PAYE you have more or less confirmed my point. If a person on a low income inherits a home, can they actually afford the property taxes? Surely they should contribute what they can afford and the way to do that is through income tax, they too are probably a working sucker paying PAYE.

Are you suggesting that they sell the home they inherit because they might not be able to afford the property taxes? What good would that achieve?
They will have to live somewhere.

Water John

What is critical is that the country maintains a wide a tax base as possible. Once you have over reliance on one area, you're at high risk.
Property and services are taxed in almost all western countries. I would say income tax, is as high as it should be in this country.

Princess Consuela Bananahammock

Topgear on Dave wrote: »

Interesting. You would remove the "burden" of LPT off someone who may have inherited a house worth a few hundred thousand (that's wealth whether you like it or not) and then tax working people (PAYE suckers who are probably renting) at the lower end.

That's wild.

Wealth is not the same as income. You can't slice off 3% of a house and hand it to the revenue.

AndrewJRenko

efanton wrote: »

property taxes simply do not work for many reasons.

Just about every developed economy in Europe disagrees with you, along with the USA and others.

johnnyskeleton

efanton wrote: »

property taxes simply do not work for many reasons.

Who decides what is the appropriate value of a proerty?

We have a system that does just that right now. Every 7 or so years there is a self assessment carried out and so people who want to say their house has gone down in value can get a valuation done.

Just because you might own a house it is no indication of personal wealth, many homes are inherited. You might own a home worth 500k, but your income might only be 20k.

Sure it is. If you own an asset worth 500k, you have an asset worth 500k. The idea that someone with a 500k asset but a low income should be effectively exempt from paying taxes (and, presumably, entitled to benefits or e.g. student grants etc) is a bit odd.

There is a phrase used a lot in Ireland - the haves and the have nots. The people with 500k houses with no mortgage are the haves, IMO.

Also it dis-proportionally hits those that live in cities rather than rural areas simply because of location. You and myself might live in IDENTICAL homes but because one of us live in Dublin and the other in a rural area the tax rate would be significantly different. How could that possibly be fair?

So? Cities generally have better services so its only fair that people who live there and benefit from those services should pay more.

The only fair system of funding services and facilities is general taxation.

I hate this ohrase general taxation. Its a euphamism for increased income tax. Similar to the Brexiteers saying an Australia style trade arrangement rather than no deal.

But for that to work the taxation system must be fair to start with and its not. There are high income workers paying significantly less tax than middle income workers because they are able to avail of tax breaks that a PAYE worker simply cant.

Such as? Which tax breaks? If you mean the pension tax break, you pay tax on the pension when drawn anyway and besides, shouldnt we not be encouraging people to have pensions? Anyone can avail of this tax break and so it seems unlikely that someone earning more would pay less tax unless they had a massively bigger pension, and they will pay tax eventually on that.

There is a reason why general taxation of income, profit or gain works and is the system used by almost every government in the world and that is that it is generally the fairest way for the state to extract taxation to fund services.

The reason income tax is the preferred method is, to quote the late Terry Pratchett, that it allows government to extract the maximum amount of milk for the minimum of moo. "Fairness" doesnt really come into it

I see no point whatsoever in ANY form of property tax. If additional revenue is required to provide services governments should simply be honest about this and adjust general taxation levels.

The problem is that eventually, and im not saying weve reached this point, you disincentivise productive labour so much that people either work less or emigrate. Its very unwise to put the sole burden of taxation on work, not least because we should encourage productive work

Our taxation system is broke

I heard an interesting quote recently - France is a paradise, but the French think they are in hell. I consider this comment to be a similar type scenario - the system works reasonably well as a compromise, and thats why everyone hates it.

Princess Consuela Bananahammock

johnnyskeleton wrote: »

Sure it is. If you own an asset worth 500k, you have an asset worth 500k. The idea that someone with a 500k asset but a low income should be effectively exempt from paying taxes (and, presumably, entitled to benefits or e.g. student grants etc) is a bit odd.

Hang on a second - mortgages are purcheses like any other and, as such are optional. Just becuase you chose not to have one or don't need one, doesn't imply you should be taxed on the money you have from not paying on a mortgage!!

Money saved is NOT income!

It should really be a land tax instead of a property tax.
Higher level land area tend to have more & better services then areas that are worth less.
People that have homes in the higher level land areas should pay more.
Also businesses & companies based in these areas should also pay the land tax

Johnboy1951

johnnyskeleton wrote:

If you own an asset worth 500k, you have an asset worth 500k. The idea that someone with a 500k asset but a low income should be effectively exempt from paying taxes (and, presumably, entitled to benefits or e.g. student grants etc) is a bit odd.

There is a phrase used a lot in Ireland - the haves and the have nots. The people with 500k houses with no mortgage are the haves, IMO.

I would ask you to consider this ..... a person starts of with little or nothing, and works and saves (rather than be profligate with their money) and ends up owning their own home which might be worth your 500k due to continued investment during their working years.

Every cent used in acquiring that 500k asset (their home) has been taxed ...... various taxes on income and VAT on materials etc. etc..
Now that they can no longer work, and have minimal or no income you think they should be be taxed again on the result of their life's work?

With that I disagree.