FF get windy about property tax …. now it’s time to get worried.

16 August, 2009

All serious economists agree that Ireland needs an annual property tax on private residences, and not just because extra revenue needs to be raised to reduce our vast public spending deficit.  An annual property tax has merit in its own right, as an alternative to transaction based stamp duties or extra taxes on income.  Ireland is possibly unique in the developed world in not asking owners of private residences to make a realistic contribution to local services (other than bin charges).

The Commission on Taxation report, due within weeks, is almost certain to recommend a property tax.

So we can be confident therefore that the Government will do the right thing, and at the same time get rid of any lingering suspicions that Fianna Fáil will always jump to the  builders’ tune, by following through and implementing a sensible annual tax on residential property.  We can be confident also that FF will put aside any petty party political considerations and do the right thing in this country’s hour of need.

Not.

The front page of today’s Sunday Tribune has a heart-warming story that offers one reassurance that some old certainties remain, that in a crazy and generally unpredictable world there is still the occasional cast-iron verity: that Fianna Fáil will put party before country.

“….some ministers are worried about the inevitable public backlash to the property tax and are privately questioning whether it is ‘worth the hassle’ given the limited amount of money that will be realised…. ‘do we really need to give our opponents another stick with which to beat us?’ said one source close to cabinet….. ‘there is a lot of resistance among ministers to this and I think it is less likely to happen than more likely’ ”

This is consistent with a story going round, and which is gathering momentum, to the effect that Fianna Fáil now intends to engineer an exit from Government before they have to take and implement the really hard decisions that are necessary.  The skill will be in setting up a plausible scenario where the Government will fall, perhaps ostensibly as a result of standing up to some interest group or other (a pity perhaps that the evil pharmacists didn’t oblige) and they will be able to claim a vestige of self-respect (they believe).

For have no doubt about it: Fianna Fáil are not willing to suffer further and serious political damage, possibly terminal in nature, as the price for doing what is necessary to solve our economic problems.  A period in opposition looks tempting to them just right now, so that they can rebuild support as the replacement government takes it on the chin.

This is a risky strategy unless they go quickly.  For there is an alternative scenario where the bond market comes to believe (potentially with some justification)  that Fianna Fáil are bent on saving themselves instead of the country, and we could see the supply of funds from foreign lenders drying up.  Then we will have lost control of our own economic destiny, and the International Monetary Fund (or the EU Central Bank) will start running the show.

That would be truly shameful.

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