There as been debate recently about the likely discrepancy between the amount of property tax paid by urban and rural dwellers. This arises from the decision to base the tax on the property market value rather than the site value.
Sunday's Independent took a typically restrained approach (sarcasm alert) in this article saying that it has "emerged Dubliners on the lowest rung of the property ladder will pay higher property tax than the owners of large four-bedroom homes across rural Ireland".
publicpolicy.ie, an independent think tank (I should declare I was involved in a recent report they commissioned on a different topic), have argued that Dubliners should pay more in property tax than their counterparts beyond the pale - because they:
have manifold advantages over the latter, including easy access to tax-payer subsidised infrastructure and services in:
Certainly it's the case that there a lot of benefits from city-living. And it would seem that the additional costs from living in the city are less than the benefits people get from it, otherwise we'd see a widespread move away from the city to outlying regions.
But wait, that is what we saw in the last decade as families located further from the capital and commuted into the city to work because they couldn't afford the cost of purchasing or renting in the city or because they perceived the cost of purchasing/renting was higher than the benefits they got from living in the city.
The publicpolicy piece in my view also misses a key point which could argue for a lower charge on city dwellers. This is the effect of economies of scale. While city-dwellers have more facilities available (and provided) to them, these could be provided at a lower cost per person or per household because of the economies of scale. It is cheaper per household to maintain a road to housing estate than it is to maintain a road that leads to one or two one-off houses.
The property tax is intended to fund the provision of local services so it would be useful to examine local authority spending by area to see if there is lower expenditure per capita in different areas.
The table above shows the budgeted spending by local authorities for 2012. The second table includes the spending by town and borough councils for the local authority area in which the relevant town is located.
It can be seen that the cities top the list of spending per capita - suggesting there may not be economies of scale in this expenditure. This provides further support to the argument that city dwellers should pay more for the services provided to them.
There is of course one important aspect that I can't get at in this data which is the use of services in Dublin and other cities by those who live elsewhere. Dublin City Council provides, for example, road maintenance for those who commute to Dublin but who live in other areas. It is noticeable for example that Kildare, Meath, Fingal, Laois and the counties which have cities locate din them (Cork, Galway and Limerick) are located towards the foot of the table. It may be that residents in these areas are benefiting from the larger spending in the cities.
My final declaration of interest - I live in a suburb of Cork city.
I'm an economist so many of these posts will be about economic issues. But since everyone is allowed a view on economics I am inclined to go beyond my profession to throw my tuppence ha'penny into other issues.