Simon Harris (Wicklow, Fine Gael) | Oireachtas source

The taxation of property through an annual recurring tax is less economically distortionary than the imposition of tax on either income or capital. This is supported by economic literature, as well as by OECD, Organisation for Economic Co-operation and Development, analyses which underscore how an annual tax on land and buildings has a relatively small adverse impact on economic performance. I am just back from a recent ECOFIN meeting at which the issue of reducing labour taxes by spreading them to other areas was discussed. The Government is determined to do everything in its power to protect and support the creation of jobs and the introduction of a local property tax was part of a broader approach to the taxation of property. I expect the allocation of local property tax to local authorities will provide a sounder financial footing for the provision of local services that will lead to greater transparency and accountability at local level, as well as a stronger democratic relationship and clearer lines of accountability which can only benefit the provision of services.

Ireland was the only OECD member state that did not have a recurring property tax and allowed tax relief on rent and mortgage interest payments, as well as on capital gains by way of a principal private residence relief and capital acquisitions by way of a dwelling house relief. The new local property tax offers a much more sensible policy mix and is similar to what is seen in many other jurisdictions. For the reasons outlined, the Minister does not propose to accept the recommendation.