How (not) to do public policy: Water charges and local property tax

Abstract

Two of the most contentious measures introduced as part of the severe fiscal consolidation necessitated by Ireland’s recent economic and financial crisis were the Local Property Tax and water charges. The two measures had an amount in common. Initially it was envisaged that each would raise of the order of €500m annually.1 They also shared a troubled history. Attempts to implement water charges in the 1990s had run into sufficiently strong opposition as to render them a no-go area for policy makers for the next decade or more. The fate of the modest and short-lived Residential Property Tax, abolished in 1997, had a similar inhibiting effect on policy in relation to the taxation of property. The crisis, in particular its catastrophic consequences for the public finances, meant that all bets were off. Revenue-raising measures previously deemed politically unacceptable were forcefully propelled onto the agenda. The first formal indication that government was proposing to reintroduce water charges and a new property tax came in the Fianna Fáil–Green Party Renewed Programme for Government in October 2009, a position that was re-affirmed 12 months later in the same government’s National Recovery Plan, and subsequently in the Programme for Government adopted by the new Fine Gael–Labour administration in March 2011. It is fair to say that at that stage there was no compelling reason to expect that one of these measures would be materially more unpopular or problematical than the other, yet it transpired that one was successfully implemented while the other was a failure, arguably on a scale comparable to the poll tax debacle in the UK in the 1980s