Dr. Conor O'Toole:

I wish to make two points further on both the local property tax and the proposed site value tax or, as the commission said, it is more just a land tax and a cost on land holdings, be they zoned land or otherwise. One other potential benefit of having a kind of broad-based local property tax that would transfer through to a land tax or site value tax is that they can act as a kind of stabilising mechanism for house prices. For example, if there is an additional fiscal cost for owning a higher priced property, that will ensure that the purchaser of that property has to be able to afford that component. Therefore, it can act as a kind of stabilising mechanism in terms of prices, so that is an important component.

The second thing that is mentioned in the commission’s report and is particularly important here is that the movement towards having generalised broad-base taxation on immovable property helps to take some of the procyclicality out of the property and the receipts from the property and housing market. One of the features of the Irish housing market over many years has been that revenues are collected procyclically because they happen on property transfers, and particularly the huge number of receipts from the property market that came in during the housing boom. If one moves that taxation burden from the transfer of property towards the immovable property, that can then help to remove the procyclicality of the fiscal receipts and that. It is an important point when think about these policies.