Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I will refer to the amendments in the order in which they arise. I am aware of the issues that Deputy Boyd Barrett is attempting to address with his proposed amendment No. 93. Officials of the Department of Finance, with officials of the Department of Environment, Community and Local Government, have been examining the alternatives other than testing that may be available to confirm entitlement to a local property tax exemption with a view to coming up with a viable solution for all.

The Deputy's amendment removes the requirement for sub-floor hardcore testing and replaces it with either acceptance by the pyrite remediation board for remediation or location in any area where the presence of pyrite has been established. As I am sure the Deputy will be aware, the pyrite remediation board's pyrite resolution scheme is limited to properties with a damage condition rating of two and this requirement would be of no use to a property with a damage condition rating of one with progression. As the pyrite remediation board's pyrite resolution scheme is a scheme of last resort, it would also be of no use to properties being remediated through other avenues, for example, insurance or directly from builders.

It is important that any changes that may be made to the LPT legislation do not go beyond the objectives of providing only a temporary exemption for homes with significant pyritic damage. As I have advised on many occasions, a liability to local property tax should apply to all owners of residential property with a limited number of exemptions. Limiting the exemptions available allows the rate to be kept low for those liable persons who do not qualify for an exemption. The other option proposed by the Deputy, that is, location in any area where the presence of pyrite has been established, does not in itself establish the presence of pyrite in any particular property. In this regard, I believe the Deputy's proposal is too broad and could result in the relief being available to those beyond the intended target group.

The local property tax operates on a self-assessment basis and it is a matter for the property owner, in the first instance, to calculate the tax due based on his or her assessment of the market value of the property. Where a property owner does not qualify for an exemption, when making an assessment, issues such as the presence of pyrite in a particular area would be one of the factors that could be taken into account in valuing their property. The advice is clear. If there is pyrite in the area or if there are signs of pyrite in the house, that should be taken into account when a home owner is assessing the value of his or her property. For the reasons outlined above, I oppose the Deputy’s amendment.

With regard to Deputy Doherty's amendment No. 95, the non-principal private residence charge has been superseded as a source of local government funding by the introduction of the local property tax. The level of income expected to be generated by LPT in 2015 is in the region of €500 million. The reintroduction of the NPPR charge, even at double the rate of the original charge, which was €200, would not generate one third of this level of income. I expect the local property tax to provide a more sustainable system of funding for local government and a sounder financial footing for the provision of local services. It will lead to greater transparency and accountability at a local level and it is certain that the stronger democratic relationship and clearer lines of accountability created can only have a beneficial impact on service provision from the perspective of the service user.

As regards abolition of the local property tax, it is well-established that the taxation of property through an annual recurring tax is less economically distortionary than the imposition of tax on either income or capital. This is supported by economic literature and OECD analysis which underscores how an annual tax on land and buildings has a relatively small adverse impact on economic performance. ESRI research shows that a property tax is six times more job-friendly than taxes on work and income. The Government is determined to do everything in its power to protect and support the creation of jobs. The introduction of a property tax is part of a broader approach to the taxation of property. The aim is to replace some of the revenue from transaction-based taxes, which have proven to be an unstable source of Government revenue, with an annual recurring property tax, which international experience has shown to be a stable source of funding. The local property tax has been successfully introduced and we can look forward to a stable source of funding which is fair and progressive with the owners of the most valuable properties paying most. The tax is equitable, has reference to ability to pay, conforms to international norms and significantly broadens the domestic tax base. In the circumstances, I do not propose to accept this amendment.

Deputy Pearse Doherty also referred to recent events in Donegal. I understand that the Department of the Environment, Community and Local Government has been concerned about this matter and has been in touch with interests in Donegal about the problem with concrete blocks in that county. I understand that as yet no firm evidence has been provided to the Department of the Environment, Community and Local Government to substantiate the figures quoted. I understand the Department of the Environment, Community and Local Government is prepared to review any information that can be made available on these matters, such as test laboratory reports on the concrete blocks and structural reports on the affected dwellings, and having regard to such information, the Department may be in a position to offer advice that may be of assistance to affected home owners.

As a general rule, building defects are matters for resolution between the relevant contracting parties - the home owner, the builder, the supplier or their respective insurers, and in the event a settlement cannot be reached by negotiation, the option of seeking redress in court can be considered. Where appropriate, affected home owners should pursue their structural guarantee or insurance providers where structural guarantee insurance is in place.

It is understood that legal proceedings may have been instigated in some of the cases relating to the problem in County Donegal, which is the appropriate course of action to take in the event that the responsible parties, that is, the builder, the supplier, their insurers or both, do not face up to their responsibilities and provide a solution to the affected home owners. However, as I stated, the Department of the Environment, Community and Local Government is available to receive relevant information and to be of assistance to home owners if they are in a position to be of assistance.

As for amendment No. 96 tabled by Deputy Michael McGrath, the Deputy proposes to give broad discretion to the Minister as to when properties should be revalued for local property tax, LPT, purposes. As the local property tax is a new tax, the Government wishes to provide certainty to home owners and for this reason, valuation periods of three years were introduced with the exception of the first valuation period, which covers three and a half years. In addition to providing certainty, it also eases the administration burden on the home owners by not being obliged to revalue their houses each year. The Deputy may be aware that under the LPT legislation, where a property is not a “relevant residential property” on a valuation date, that is, not liable to LPT, with certain exceptions that property will not be a relevant residential property until the next valuation date. In the interests of equity to compliant LPT payers, it is important to have regular valuation dates in order that newly-built properties are brought into the LPT net. It also provides certainty to those home owners as to when they will become liable to LPT. In the absence of further valuation dates, new properties built after 1 May 2013 would not be liable for LPT and would not have a valuation for LPT purposes. Should those properties be brought into the scope of LPT using a different valuation date, it would be inequitable to those home owners as their LPT liabilities would be assessed using a later valuation date where property prices are increasing compared with those currently on the register.

While I am very conscious of the concerns of home owners regarding increasing property prices and the effects this will have on their LPT liabilities, particularly in urban areas, I do not believe the Deputy’s amendment is the most appropriate way to address these concerns. The next valuation date is not until 1 November 2016. In advance of that date, in conjunction with my officials, I will examine the LPT and any impact on LPT liabilities due to increasing property prices. However any consideration at this stage would be premature. For the reasons outlined above, I am not minded to accept the Deputy’s amendment.