See Search Box
lower down this column for searches of Finfacts news pages. Where there may be
the odd special character missing from an older page, it's a problem that
developed when Interactive Tools upgraded to a new content management system.
Finfacts is Ireland's leading business information site and
you are in its business news section.
The Irish Independent reports
that prioperty tax dodgers run the risk of having all their income audited by
the Revenue Commissioners, the Irish Independent has learned.
A detailed list of average house prices in every
area of the country will be given to homeowners to help them assess the value of
But the new property-tax law will set out the
interest and penalties for not paying up.
Similar to the Revenue's policy on income tax
dodgers, failure to pay the property tax will result in people running the risk
of an audit.
The highly unpopular tax has left Government TDs
worried about the loss of support in the wake of this week's punishing Budget.
Tensions are now mounting between Fine Gael and
the Labour Party as the coalition partners try to blame each other for one of
the Budget's harshest measures – the cut to the respite care grant.
The Government is coming under increasing
pressure to reverse that decision but Taoiseach Enda Kenny insisted that the
Government would not row back on cuts in the Budget.
Mr Kenny said "none of the choices" had been easy
but the Budget had now "gone through". He added: "It is the intention of the
Government to carry through the Budget."
The property tax legislation will be published
Payment will begin from the first week of next
May onwards, although it will only be for half of 2013.
Urban homeowners will cough up almost half of the
property tax take in 2014, despite accounting for just over one third of the
number of households in the country, an analysis by this newspaper reveals.
The tax authorities are currently drawing up the
biggest database ever compiled on the ownership of houses in the country.
The Department of Finance says Revenue will be
given the full range of powers in the new law, including the charging of
interest and penalties and prosecution.
"Not paying the property tax will be the same in
Revenue's mind as not paying a tax bill," a spokesman said.
Revenue often cites the threat of an audit for
taxpayers who fail to file their tax returns on time.
The legislation will also allow for the
compulsory deduction of the property tax at source in certain cases, including
some social welfare payments – although it will not be taken from the primary
Revenue already has the data from the household
charge, second-home tax, rented houses and stamp-duty payments and will soon
have the details of electricity companies.
The property tax law will set out the interest
and penalties for not paying up – including the risk of an audit by the taxman.
Government sources say the reason behind handing the responsibility for
collection over to Revenue is to ensure higher rates of payment.
Ministers also believe that homeowners will be
less likely to defy the taxman – compared to the local council – and won't want
to pop up on Revenue's radar.
Property tax dodgers will be "safe to assume"
that Revenue will look at their income, said a source, adding: "Non-payment or
late payment of income tax triggers a look at tax offences, which may result in
The Revenue Commissioners are expected to use
their Risk Evaluation Analysis and Profiling (REAP) for non-compliant taxpayers.
The REAP system prioritises cases based on risk
"enabling Revenue to target its attention on those who need it most and
minimising contact with compliant customers".
The system focuses on a taxpayer's track record,
rather than upon single returns.
First-time buyers next year will not have to pay
the new Local Property Tax until the end of 2016. This is among a series of
exemptions announced by Finance Minister Michael Noonan in the Budget.
However, this concession has proved divisive as
people who bought during the boom – and paid large amounts of stamp duty – will
not get a break from the property tax.
The Government was advised by an expert group
advising on the tax that these homeowners should not be exempt. It told the
Coalition that housebuyers knew they were paying high stamp duty when they
bought their homes.
A couple who bought a home during the property
bubble would have typically paid out €15,000 in stamp duty for a €300,000 home.
That home has now probably halved in value.
The expert group, headed by consultant Dr Don
Thornhill, was asked by the Government to come up with options for the new tax.
It admitted that many people ended up with even bigger debts than they should
have because they were forced to add the cost of the stamp duty to their
City-dwellers will end up paying almost half of
the country's total property tax take, as house prices are generally much higher
in urban areas.
An analysis by the Irish Independent reveals that
Dublin city dwellers are likely to pay an average property tax rate of €405,
compared with their rural counterparts who will pay an average of €249.
This means that the capital's 466,461 households
will pay €188.9m – or 39pc of the entire projected property tax take.
Residents in cities Cork, Waterford and Galway
will pay an average rate of €315.
The cheapest homes to pay tax on are in Longford.
This is the only county where the average house price is below €100,000,
resulting in a property tax of just €90.
Independent also reports that the Government says talks aimed at securing relief
on the €30bn cost of bailing out Anglo Irish Bank are still ongoing, despite the
ECB's president appearing to rule out hopes of a better deal.
Mario Draghi's European Central Bank and the Government have been locked in
talks on the issue for months.
Finance Minister Michael Noonan is desperate to change the terms of the Anglo
rescue, which is set to cost the State €3.1bn a year in capital and interest
He has already said that he does not want to make the next payment when it falls
due in March. But skipping the deal without agreement from EU partners,
including the ECB, would trigger a wider financial and political crisis.
However, Mr Draghi now appears to have ruled out any prospect of help to ease
the terms of the Anglo debt. That debt is owed to the Irish Central Bank, part
of the ECB system, so ECB support would be required if the burden was to be
"The ECB cannot enter into any agreement viewed as monetary financing," Mr
Draghi said yesterday. "Other than that, there is plenty of goodwill towards
His comments were in response to questions on whether a deal could be done
before the next €3.1bn bill for Anglo falls due in March.
Last night, a spokesman for Mr Noonan said the Government did not believe that
an Anglo deal would involve "monetary financing" – the term for printing new
money. Talks remain ongoing, he insisted.
Mr Draghi made his comments after Mr Noonan had said earlier in the day he was
"pretty confident" that agreement on the issue would be reached in time to allow
the State avoid making the €3.1bn payment in March.
Seamus Coffey, an economist at University College Cork, said: "What Mario Draghi
seems to be saying is that if there is going to be a change on this, he wants
someone else to do it."
However, Mr Coffey cautioned against taking any pronouncement as definitive,
given previous changes of tack from senior EU officials over the course of the
ongoing financial crisis.
There was some hope for Ireland when Mr Draghi left open the prospect of using
the new European bailout fund to help meet the cost of the banking crisis.
Germany and other wealthy countries have tried to block use of the fund to deal
with so-called 'legacy' issues dating back to before the fund was established in
October. Mr Draghi said no one had yet defined "legacy debt" and until they did
nothing specific had been ruled out.
Away from the Irish question, the ECB president painted a grim picture of the
economic situation across Europe.
The latest ECB forecast is for continued weakness in the eurozone over the next
six months, with any recovery now not anticipated until the second half of 2013.
The Irish Times reports that
Taoiseach Enda Kenny and Tánaiste Eamon Gilmore have ruled out any row-back on
the budget in the light of growing unease among backbench TDs in both Government
parties about some of its harsher measures, including cuts in the respite care
The €325 cut in the €1,700 grant for respite care
yesterday assumed greater importance as a possible stumbling block for some
Labour and Fine Gael TDs.
The new property tax, the €5 a week increase in PRSI and particularly the cuts
in child benefit were also being viewed as potentially difficult issues.
Mr Kenny, while accepting that many of the budget changes made to achieve a €3.5
billion adjustment were “unpalatable”, nevertheless insisted that all of
measures would be implemented.
After meeting US secretary of state Hillary Clinton in Government Buildings, Mr
Kenny said: “The budget yesterday was and will be the toughest of this
administration’s lifetime. None of the choices were easy; all of them were
Asked if he would reverse any of the harsher measures, including the cuts to
respite care, he responded: “The budget’s gone through yesterday. It is the
intention of the Government to carry through the budget as put through the Dáil
Mr Gilmore also set himself against any U-turn. Asked about criticisms that the
cut in respite grants was unfair, he said: “I think all of the cuts are very
He said that was particularly true for those who had endured most, but the
country needed to find its way out of the financial crisis.
A package of tax measures directed at richer people had been the largest tax on
wealth ever introduced in Ireland, Mr Kenny said.
A small number of Labour Party TDs, including party chairman Colm Keaveney, have
indicated their support may be conditional on changes in the Social Welfare
Bill, which will come before the Dáil next week, to give effect to welfare cuts.
Clare TD Michael McNamara has also expressed misgivings. Two Dublin Labour TDs,
Michael Conaghan and Eamon Maloney, attended meetings with senior officials of
the Department of Social Protection yesterday to outline their concerns about
cuts in child benefit and they will hold further meetings today.
“Our concerns are very significant as they were about child benefit, which is
especially important in working-class areas which we represent,” said Mr
Conaghan, from Dublin South Central. They had started a process where they hoped
they could pursue the issue vigorously.
Respite care was described by a number of TDs from both Government parties as
having the potential to have the same impact as the cuts for disadvantaged
schools and small schools in last year’s budget.
Minister of State at the Office of Public Works Brian Hayes described the cut of
almost 19 per cent in the respite grant as “drastic”.
However he ruled out any review on the basis that the Government could not start
unravelling the budget. “There is no room for that to be reversed at this
In the Dáil, Labour Minister for Communications Pat Rabbitte said the cut in
respite grants was better than a cut in the carer’s allowance, which had been
The Irish Times also reports
that European Central Bank chief Mario Draghi has questioned whether the bank
might recast the debts of Anglo Irish Bank, suggesting such a deal would break
Mr Draghi’s remarks, one day after Dublin
introduced a €3.5 billion budget package of cutbacks and tax hikes, raise fresh
doubt over the Government’s long campaign to restructure the Anglo Irish Bank
promissory note scheme.
They came as European Council president Herman
van Rompuy urged EU leaders to agree terms within four months for direct bank
rescues by the European Stability Mechanism fund, another of the Government’s
Speaking to reporters in Frankfurt after the ECB
kept its main interest rate at a record low of 0.75 per cent, Mr Draghi welcomed
the budget measures. “It’s a reaffirmation of the successful – I would say –
commitment of the Irish Government to restoring sound economic conditions, both
fiscal, but also, more broadly, structural conditions,” Mr Draghi said.
Asked if it was reasonable in light of the budget
to expect a deal on Anglo’s debt before the next €3.1 billion payment falls due
in March, he said the ECB would not illegally print money.
“The ECB cannot undertake any agreement – cannot
enter into any agreement – that is being viewed as monetary financing, that
would be forbidden by article 123 of the treaty,” he said. “So, other than that,
there is plenty of goodwill.”
Article 123 of the EU treaty, known as the
“no-bailout clause”, forbids the ECB from providing overdraft facilities or
other forms of credit to any central government or public body.
Minister for Finance Michael Noonan said in
September that the ECB was now more willing to pursue talks with the Government
but no agreement was reached before the budget.
On RTÉ radio yesterday, Mr Noonan said he was
“pretty confident” of reaching an agreement to avoid the March payment. “It’s
not done yet,” he said. “I don’t want to pre-announce or anything like that.”
Mr Draghi’s remarks suggest that a durable
solution acceptable to all sides remains elusive so the Government will be under
severe pressure in January.
Mr Draghi was one of three senior Europeans who
helped Mr van Rompuy draft proposals for a summit next week at which EU leaders
aim to agree another plan to fortify the single currency. While the question of
direct bank rescues by the ESM has fallen off the immediate political agenda, Mr
van Rompuy’s paper aims to bring it back to the fore. “The legal and operational
framework for ESM direct bank recapitalisation should be finalised by end-March
2013,” it states.
The timetable is regarded as “very, very
ambitious” in diplomatic circles. However, the move is positive from the
Government’s perspective, as it wants the ESM to take direct equity stakes in
AIB, Bank of Ireland and Permanent TSB.
The Irish Examiner
reports that the Government’s decision to increase the Vat cash accounting
threshold has been welcomed by business groups.
However, commentators say the threshold — which
is to be upped from €1m to €1.25m — is not being widened enough.
The threshold is one of the few reliefs for cash-strapped small businesses in
their battle against overdue payments.
The scheme allows companies pay Vat to Revenue only after they have received due
payment from their own customers; as opposed to larger firms which are required
to pay when invoiced by Revenue.
From next month, any SME with an annual turnover up to €1.25m will have until it
gets paid by customers before it needs to pay its Vat bill.
Ibec chief economist Fergal O’Brien said: "Out of the 147,000 employers in the
State, approximately 115,000 employ between one and nine people; and many of
them would fall into that €1m-€2m turnover range."
He said the measure was a "significant step in the right direction" and would
help cash flow, but that the threshold should have been wider.
Ibec and small firms lobby groups Isme, along with the Small Firms Association,
had all been looking for the threshold to be widened from €1m to €2m; but each
expressed satisfaction a degree of movement had been made on the matter.
Foreign news reviews and more
comprehensive coverage of Irish news is available in our Daily News Digest in
Global category on Finfacts Premium.
out our subscription service, Finfacts Premium
, at a low annual charge of €25 - - if
you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to
support the service.