Irish home owners need to be taxed 'properly' to reduce inequality, economist says

Properties need to be taxed "properly" to achieve fairer wealth distribution in Ireland, according to a leading economist.

John FitzGerald said household wealth nationwide largely consists of people’s homes, accounting for almost 70 per cent of net wealth.

This is higher than the euro zone average, which is just over 60 per cent.

Mr FitzGerald said Ireland has become more unequal over the last decade as younger generations got locked out of the housing market, while the value of the homes owned by their parents and grandparents increased.

The share of housing wealth owned by the bottom half of the population has dropped from about 25 per cent to 14 per cent, a fall of 10 percentage points.

The Irish Times columnist told Newstalk radio that the only way to redistribute wealth more fairly is to raise property tax.

"Wealth is very unevenly distributed in Ireland," Mr FitzGerald said. "It's more even than much of the rest of Europe, but it's uneven.

"And the main form of wealth in Ireland – it's not like the US, where people have stocks and shares – it's housing.

"The top 10 per cent of the population have one third of the housing wealth. And there are a lot of people who don't have houses.

"And if you tax property, you tax the people who are lucky enough to own a house. And in particular, you'll be taxing the more wealthy."

He said the current local property tax system, collected by Revenue and passed on to local authorities, is efficient in terms of collection cost, but governments and councils have shied away from enabling the yield to rise in line with soaring house prices.