DOUBLE BLOW; Families Face Paying out [Euro]2,000 a Year for Water Charges and a Property Tax as the Deal for a Coalition Is Done; Deal Is Done, Now for the Hard Part

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Byline: Senan Molony and Aiden Corkery

HARD-PRESSED families will be hit for an extra [euro]2,000 a year under the Fine Gael and Labour deal hammered out over the weekend.

Both parties are now pledged to a tax on our homes, and the introduction of water charges, possibly as soon as next year, though neither party spelled this out in their manifestos during the General Election campaign.

Labour leader Eamon Gilmore warned his party that the policies would prove unpopular with ordinary workers, and he predicted that they would have to prepare for strikes and protests, and times when they would have to 'walk through a forest of placards'.

Critics pointed out that the incoming coalition was essentially pushing ahead with the four-year programme introduced by the outgoing Fianna Fail-led government and accepted by the IMF, with some minor amendments to put a Fine Gael and Labour stamp on policies.

Accordingly, income tax will be frozen at current levels while social welfare benefits will be untouched, and there will also be relief for those in negative equity.

But these benefits will come at great cost to many households in the form of an annual property tax plus metered water charges.

The property tax could come in at an 'opening bid' of [euro]200 a year from 2012 and is thereafter likely to escalate as homes are given rateable valuations.

The water charge will be longer in arriving, but could initially be of the order of [euro]250 annually for a standard semidetached house.

Meanwhile, Ireland's 1.4million households are to be hit by a host of stealth charges as the new Government attempts to rake in a further [euro]9billion over the next four years.

On tax alone, Fine Gael admitted during the campaign that its proposals would cost the average family an extra [euro]1,785 a year before the end of the adjustment - but Labour's would mean more than [euro]3,100.

The new Programme for Government contains no specific figures, but the compromise arrived at - which is nearer to Fine Gael's plans than those espoused by their partner - could see homes hit for an extra [euro]2,250 annually by the end of 2015.

Neither party will confirm the numbers or provide the necessary level of detail, but say it is not because they want to hide their true intentions.

Instead, they say they wish to preserve their flexibility for crucial negotiations in Brussels later this month.

Fine Gael and Labour will formally take power on Wednesday, with the parties saying they will consider 'various options for a site valuation tax' - similar to the system of domestic rates abolished in 1977 - while saying its need arises 'from the previous Government's deal with the IMF'.

And while any such property tax is expected to take into account the significant number of households in mortgage distress - meaning exemptions for some - these would inevitably lead to a higher charge for others.

The parties also say they will introduce a 'fair funding model' for water through a new State-owned water utility that takes over responsibility from local authorities.

The objective is to install water meters in every household in Ireland and to move to a charging system that is based on use over and above a free allowance.

Child benefit, however, will be protected.

Labour had warned during the election that Fine Gael in power on its own would reduce child benefit for the average family by [euro]252 a year.

The two parties say they will crack down on welfare fraud, with a 'zero tolerance' policy underpinned by a major enforcement drive involving more regular face-to-face interviews, high-security technology and better sharing of data across Departments and agencies.

There will be a new Payments and Entitlements Service to process all major welfare and other entitlements, along with a Jobs Fund to be established within the Government's first 100 days. …