Document Type

Book Chapter

Rights

This item is available under a Creative Commons License for non-commercial use only

Disciplines

Economics, Political science, public administration, Urban studies (Planning and development)

Publication Details

Published in A Fairer Tax System for a Fairer Ireland Edited by Brigid Reynolds S.M. and Sean Healy S.M.A. CORI Justice Commission October 2004. Uploaded to Arrow with kind permission of the editors.

http://www.veritasbooksonline.com/books/social-issues/fairer-tax-system-for-a-fairer-ireland.html

Abstract

Funding local government has been a permanent feature of debates about public policy in Ireland and Many feel that the balance of power between local and central government is weighted too much in

This paper suggests that the concept of economic rent, on which the justification for property taxes rests and its relevance to the property market in a modern, economically successful and urbanised Ireland, needs to be vented, discussed and debated.

The proposition is that if a greater understanding was created about the economic characteristics of landed property both value capture and local property taxes would achieve greater public acceptance. They then could be used to facilitate more accountable and responsive local government.

The paper is organised into three parts: Part one is a discussion about the specialist field of land and property economics. Noting that land and property have special characteristics, the paper suggests that the economics of property markets are not well understood in Ireland. It is suggested that this a result of our history.

The second part looks back to the classical economists for insights into the distribution of the proceeds of high development land prices and considers what is called the Ricardian Residual Land Value Theory. Using the concept of economic rent it argues that development land values are a residual and as such can be taxed without distorting production decisions.

The third part looks at local property taxes and the inadequacies of the property tax system that applied in Ireland in the past with a view to learning about the characteristics of a more acceptable approach if land and site values were seen as an economic rent. It suggests that land or site value taxation might offer a suitable base for local property taxation.