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Fine Gael miss the point on Site Value Tax

Fine Gael have referenced Site Value Tax in their policy plan Less Waste, Lower Taxes, Stronger Growth (p.11), arguing against and trying to distinguish themselves from both Labour and Fianna Fail in doing so. The document makes a number of mistakes, starting off by calling it “Fianna Fail’s proposal”, when it originates with the Green Party.

The initial flat rate charge means that owners of houses in standard neighbourhoods will pay as much as the owners of mansions.

This is fair enough, but it is misleading to continue to tar Labour with this brush – their interim measure is an increase in the second homes levy.

It will be difficult to pay for asset-rich but income poor households, particularly the elderly and the unemployed; and

This ignores the numerous points made about dealing with asset-rich/income-poor households made in the Implementation Paper, particularly with regard to the elderly.

It will be deeply unfair for a young generation that paid exorbitant amounts of stamp duty and VAT on the purchases on over-valued houses, many of whom now find themselves in negative equity.

And this, again, ignores what has been proposed in the Implementation Paper, which specifies that multi-annual exemptions for recent buyers should be available.

Their alternatives seem to have little to offer, particularly the proposed “Site sale profits tax”.

The option of a local “site sale profits tax”. Such a tax would be levied on the profit made from the site value on the sale of a residence (sales proceeds, less cost indexed by inflation, less stamp duty paid and less home improvements).

This is clearly another transaction tax. We would refer them to the well-established research referenced by Constantin Gurdgiev which points to the failure of transaction taxes to act against asset bubbles. Moreover, it would be a clear disincentive for landowners to sell, discouraging the release of properties onto the market.

Fine Gael seem to be trying to distinguish themselves from the other parties, and have clearly not fully engaged with the policies or ideas behind Site Value Tax. We hope they’ll meet us or engage with our material before the election.

Posted in News, Site Value Tax.