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The Irish Government

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The Irish Times - Friday, November 12, 2010
Property tax could raise €1.1bn
In this section » • Prices increase by 0.7% in year to October • Kinsella sought press help against Kenmare • Trade imbalances top G20 agenda • Former Bord Gáis chief settles €2m High Court action • Profits at BT's Irish unit up, revenues drop • Minister welcomes economic advisory council as 'national priority'
LAURA SLATTERY
A PROPERTY tax would be most easily introduced if it was based on floor area, but such a tax would be unfair on lower income groups, according to a study by researchers at the Economic and Social Research Institute (ESRI).
Economist Richard Tol told an ESRI conference yesterday that the best way to implement property taxes “in the relatively short term” would be to base it on an “assessed value” of the properties, rather than the market value, which would be difficult to measure in the current market.
This assessed value could be based on floor area, the number of rooms, the number of bedrooms, locality, the type of property and the property’s age, he said.
Using each of these factors as the basis for assessing the property value would result in around 20-25 per cent of people being either under or over-taxed.
“That’s a substantial fraction of people who are wrongly taxed. On the other hand, it’s only 20-25 per cent we get wrong,” Mr Tol said.
A study by Mr Tol and co-authors Karen Mayor and Seán Lyons states that while the most pragmatic basis for a property tax would be floor area crossed with location (by county), this would not necessarily be the fairest way of assessing the value.
Overvaluations of properties would be “more severe for poorer people”, Mr Tol said.
“It’s clearly not perfect, but perhaps it’s the only thing we can do.”
The number of rooms was a more accurate predictor of a property’s value, but basing a tax on

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