The property tax is one of the craziest decisions that this Government has taken and will do for Enda Kenny what the poll tax did for Margaret Thatcher. The banks in Ireland are zombie banks. They are not lending to small businesses and they are not giving out mortgages unless you have a huge amount fo money as a deposit.

Price Falls

Irish property prices have fallen by 55%. With each percentage fall in property prices a fresh bunch of Irish mortgage holders go into negative equity. This puts the banks into further trouble as the properties that they loaned money on become worth less and less.

until property prices stabilise we won’t know how bad the debts are for Irish banks. Until property prices stop falling Irish banks will hoard any money they get and they won’t loan it out to Irish businesses and they won’t give out any mortgages unless you have tens of thousands to put down as a deposit.

Not Clever

So, how clever is it at this point in the cycle to make it more expensive to own property by putting a tax on it? This is just crazy. As a result house prices will fall even further. More people will be in negative equity. The banks will have to hoard capital and will not loan it to small businesses and those wanting to buy houses.

The economy will contract with more people on the dole claiming benefits and businesses getting less trade and paying less tax meaning that more austerity measures are put in place.

Great Depression

This is what happened in the Great Depression in America. The lessons of history have not been learnt. They are putting in place here the same failed policies that led to the Great Depression. As I said at the start this will be Enda Kenny’s Poll Tax. Fine Gael were still riding high in the polls until the property tax came in – and now surprisingly Fianna Fail are top of the polls despite what they did to the country.

A property tax at this time is economically illiterate and will cost more money than it brings in. The Government can use the Inland Revenue to forcibly extract the property tax from people’s wage packets. But it can’t forcibly make them vote for them at the next election.

With the property tax Enda Kenny’s days are numbered.