Sir, - The social partners are at last becoming concerned about the level of inflation, the seeds of which were sown five years ago when property taxes on domestic dwellings were removed. This decision effectively removed the cap on the price of houses and modest houses have recently been sold for up to £5 million. Would prices like this have been achieved if a one per cent property tax was still in operation, involving a £50,000 annual payment?
The removal of the tax stimulated demand by wealthy people and has probably resulted in a large number of people owning several houses for their own use or for speculative purposes.
The latest Bacon Report contains some useful suggestions which, if adopted quickly enough by the Government, might have some effect on the price of houses. However, the suggestion of an anti-speculative property tax is extremely weak. The speculators have already got into the market in the past year or two, when the Stock Market weakened, and attention should be directed at these people. The only way to do this is to put a small property tax on all second and multiple houses owned by people for their own use.
This tax should increase with the value of the houses, e.g. 1 per cent up to £500,000, 2 per cent between £500,000 and £1 million, etc. It would hurt speculators with a number of houses, and should have the effect of releasing houses for the market. Ordinary people who own only one extra house, which is not their principal residence, should not object too much to this. Such a tax would also help local people who wish to remain in their own areas to compete with people buying holiday homes.
We can expect the Government to have further crisis meetings on house prices, leading to Bacon IV, but I doubt if radical measures to solve the problem will be employed because vested interests have too much influence on Government policy. I fear we can only expect more tinkering with the problem. - Yours, etc.,
John Broderick, Mountain View Park, Greystones, Co Wicklow.