Banks, property tax and how we should spend our money

There were two primary personal finance debates across Ireland this week; property tax and bankers telling those in mortgage arrears how to spend their money.

Take the property tax debate where a large chunk of it centred around whether or not homeowners living in so-called ‘ghost estates’ should be liable. Up to this week, there was a general belief that they would not. However, following a thorough review carried out by various authorities/ agencies, it was announced that far more property owners will in fact be liable. Why the surprise?

Across Ireland, there are tens of thousands of property owners living is areas with sparse or no public services and yet, are liable for property tax.  There are families in rural areas with no connection to a public sewer system. There are elderly people living in isolated locations with no access to public transport. The list goes on, but somehow, the focus centred on these ‘ghost estates’. It was a non-debate debate.

If any property tax reprieve were to be granted, it should be granted to the elderly, especially those on low fixed incomes. It would be one way of showing some respect and saying thank you for a life of service. If not excluded, then a significant discount should be made available.

The other grand debate this week centred banks…and whether or not they should be telling those looking to renegotiate their mortgage repayment where they should be spending their money.  Of course they should.

Three years ago, I encountered a family looking to reduce their €700 mortgage repayment. While working through the couples income and expenditure, it emerged (after a lot of back and forth) that they smoked a lot more than first revealed. In fact, their smoking habit was costing them slightly more than their actual mortgage repayment. The couple was horrified when they were instructed to simply reduce their smoking. Of course, the point in all of this is where does a bank stop?

The matter of personal debt and indebtedness is likely to be a hot button item on the news circuits for some time to come. With the launch of the new personal insolvency service this year, more stories will inevitably hit the headlines. This is a feature of all things being new. But headlines need to be measured to allow the new service get on with doing its job. It has already taken Ireland far too long to reach this point, we need this to work.

But the final word goes to the new property tax. While families are not singing its praises, there is an acceptance of the need for a sustainable source of public funds. However, there is also a general concern as to how effectively those funds will be used. Back in 2004, I carried out a survey where I then raised the matter of a property tax. The issue was theoretical back then but the feedback was unequivocal, the public wanted to see services delivered from the taxes they pay. This is still the case. Perhaps it is here the media can shift its focus.

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