ANNUAL UPRATINGS The snag with LVT

The Irish Times 9 Jun 25 reports that “Local property tax bands and rates set to be changed to stave off big increases. Changes are being introduced to mitigate effects rising property values have on tax bills”

This is clearly a case of political funk

“Most homeowners will see modest increases in their local property tax (LPT) next year under changes likely to be approved by the Cabinet this morning to mitigate the effects rising property values have on tax bills.

The changes require legislation to widen tax bands and reduce the rate of LPT, Minister for Finance Paschal Donohoe is expected to tell colleagues.

Property prices have increased by almost a quarter since the last revaluation of properties for the tax in 2021. Fearing substantial hikes in tax bills, the Government is expected to change the way the tax is calculated ahead of the next date for revaluation on November 1st of this year.”

 

If there is one thing the taxpayer fears most and will revolt against it’s a sudden jump, however justified, in a one-off tax charge. Fear of the reaction to updating Rating Values was the main reason for the introduction of Maggie’s much-hated Poll Tax. The idea of annual upratings of Land Values is integral to every scheme of LVT that I’ve ever seen.

It seem to be a very cunning mechanism indeed to ratchet up LVT by inflation as if by an inviable external hand. Of course the more LVT rises to its maximum value the more its beneficial effects kick in. Tell that to a granny in a corner-plot bungalow, living near a newly-opening Metro station. Why should they pay 50% more on LVT for a transport facility they are to frightened to use?

And the moral of this is?

Be very careful what you wish for! I’m all in favour of ‘Incremental Improvement’ — making things better a bit at a time. Linking LVT to LV inflation, with annual or even monthly upratings (c’mon we have the technology!) seems a clever way of sugaring the pill. “Sure no one will notice a 1% change”, or even “Go on, if they build a sewage works next door, your LVT bill might go down!”.  

 

Perhaps the maximalists are right. We must convince (force?) the government to spend its political capital in implementing full-LVT. All schemes involving sneaky uprating are doomed to be throttled by politicians’ funk.