Dr. Conor O'Toole:

I thank the Deputy for the question. In general, reading through the commission's proposals on this, it becomes very clear that there are economic benefits to having a taxation component that penalises the passive holding of immovable property, such as a site value tax. That can be coupled with additional layers, such as a zoned land tax, which increases the rate of taxation on the component of land one wants to activate, for example, for housing supply. It has been well rehearsed in many forums that activating housing supply has been one of the biggest bottlenecks we have faced as a country in recent years. One of the components of a more structural change in the land market will be the introduction of a tax like this so that there would be a cost to holding land, that is, a penalty for not activating land that has been zoned and is ready to go. There are good reasons to do that. The complexities in all of these types of measures lie in how they are designed. At what rates should they be set? Will those rates be effective in bringing about the behavioural response being sought from the land holders and the other actors in the market? How are these types of lands to be valued where there are thin markets in which there are very few transactions? That makes it complex to put a price on some of the land holdings. The complexities in things like site value taxes are more in the design and implementation phases than in the specific theoretical benefits of such taxation.