Ireland fights against property tax

A €100 flat tax remains unpaid by half of Irish households.

A protester in Dublin campaigns against tax hikes, December 2011. Credit: Getty

Ireland is facing open revolt after a rushed attempt to institute property taxes, with almost half of the nation's 1.6 million households having failed to pay the tax by the deadline of Saturday 31 March.

Dublin has so far reduced its structural deficit by €24bn since the financial crisis hit in 2008, but it has committed to a further €9bn over the next four years; in so far as there are any low-hanging fruit when it comes to spending cuts and tax rises, most of them have already been picked.

Hence the introduction of property taxes. Introducing new taxes is always an unpopular thing for a government to do, even compared to raising existing taxes (which is why, for example, the British budget saw a rise in stamp duty rather than a whole new mansion tax), but the government felt it had no choice.

Unfortunately, although the plan is to institute a progressive tax, based on the appraised value of a property, the need for the revenue to come in quickly prompted the creation of an interim measure: a flat tax of €100 on every house.

This has made an already unpopular tax even less liked. In scenes reminiscent of the campaigns against the British poll tax, nine MPs have pledged to go to jail rather than pay the charge, and come the deadline on Saturday, 794,500 households had failed to register to pay the tax.

The rushed nature of the implementation is just one of the problems Dublin is having. Leaflets designed to explain the new charge were delayed when the company initially contracted to print them went bankrupt, and then a deal fell through with local branches of Ireland's national post-office network, preventing people from paying over-the-counter.

The sheer scale of the collective action makes it unlikely that the government will be able to impose non-payment penalties on everyone, and in any case, it has bigger fish to fry at the moment. The country went back into recession in the third and fourth quarters of 2011, although it is predicted to have experienced mild growth in the first quarter of this year; and on 31 May, the government is attempting to pass a referendum on the Eurozone fiscal treaty (the same one "vetoed" by David Cameron).

Once a "celtic tiger", Ireland has fallen a long way. Whether or not this is the best way to climb back out of its hole remains to be seen, but formenting mass civil disobedience is unlikely to result in long-term growth.