FINANCE Minister Michael Noonan yesterday stated that the Cabinet had yet to decide on the exact nature of the new tax, but he made it clear that wages would be targeted.
“All that has been decided is that there will be a property tax on family homes, and that property tax will be collected by the Revenue Commissioners by experts said collecting the tax “by deduction” meant workers would have the new property tax taken straight out of their pay packets.
The Government is in the process of arranging to deduct the tax at source so as to avoid the level of non-payment it is experiencing with the household charge.
This measure will no doubt add to the unpopularity of the new tax.
Employers will be told by Revenue how much to deduct each week or month for property tax, while the self-employed and farmers will be required to declare and pay the tax as part of their annual tax return.
But there were indications last night that people on low incomes are set to be exempted from the new tax.
This could see some of the self-employed and some farmers avoiding the tax as their income may be below the threshold — even though they have large homes.
This is similar to the current system of awarding third-level grants, where only the income of the farmer or self-employed person is assessed and not the value of assets like land.
Leading property economist Ronan Lyons told the Irish Independent that this could lead to huge problems. If the tax was not carefully designed, it could create a “two-tier” system, he said.
“Even if there was a perception that some people could play the system, it would make it very difficult to sustain the property tax. People would end up voting for anyone who promised to get rid of the tax.”
Financial adviser Karl Deeter said a two-tier system would be created if salaried workers had no choice but to pay the tax, while others could get out of it through exemptions.
The property tax will be the successor to the current €100 household charge, which has some one million properties registered so far.
But 600,000 properties have yet to be registered by owners. In some counties, nearly half of homeowners still refuse to pay.