Dr. Martina Lawless:

The CSO has started to do a regular survey of household finance and consumption, which is where these distributional numbers generally come from. The first was done in 2013. The 2017 study is the other one. It has just released some data from the 2020 survey. They show the principal private residence of the household makes up about half of total wealth. A wealth tax that excludes the principal private residence takes out a large part of the base for that tax.

There is an important distinction between the local property tax and a wealth tax, which is that the local property tax is on the value of the asset - the house as it stands - while a net wealth tax would subtract any outstanding mortgages. It would introduce a difference in how the tax operated. People in neighbouring houses currently pay the same local property tax but would perhaps be liable to different wealth taxes if they included the principal private residence because that tax would allow mortgages to be offset. That would change, in particular, the age distribution of a wealth tax as opposed to the local property tax because, as we said in our opening statement, older households are much more likely to have their mortgage paid off. If the family residence were taken out of a wealth tax, that issue would not arise but, distributionally, the share of total net wealth in the country is heavily concentrated in property. Half of it comes from the household's main residence. About another 20% comes from the ownership of land and other properties. Perhaps that is where the Deputy is talking about focusing the tax more strongly.

The commission recommends that local property tax be charged at a higher rate for second properties that are not rented out but, if I understand the report correctly, it does not recommend increasing property tax for ownership of other properties that have a regular tenant. That is informed by the issues concerning rental supply in the country. Additional taxes on rental supply might have negative externalities on that supply. It is important in all these taxes not to look at each aspect in isolation but to try to think of where there might be impacts in terms of other taxes or on behaviour.

I do not have the full numbers to hand, but only the top 10% of households from these data have substantial assets that are not in property. Almost all the wealth of the other groups is held in property, mainly in households' main residence. The lowest groups in the data, the bottom 10% or 20% of households, whom the Deputy would like not to pay any wealth tax, are typically those who do not own any property.

There is a big difference in terms of the wealth holdings of homeowners versus non-homeowners. That overlap between a wealth tax and a property tax is very high.