Dr. Keith Walsh:

We welcome the opportunity to meet with the committee today and to provide whatever assistance we can around the matters covered in its letter of invitation.

I understand from the invitation letter that the committee wishes specifically to discuss a review of local property tax, the budgetary implications of the current process of revaluation and a review of costings around taxation matters, for example in relation to excise duties for tobacco and stamp duty. I will discuss both of these issues in my presentation. We will be happy to address any questions the committee might have on these topics. While we will provide whatever assistance we can, the committee will appreciate that Revenue is constrained by law, specifically by section 8(5)(i)(a) of the Taxes Consolidation Act 1997 from discussing the tax affairs of any taxpayer on confidentiality grounds. This includes any information that might lead to the identification of a taxpayer.

I am sure the committee will appreciate Revenue's role in costings and budgetary matters. As the tax administration of the State, Revenue collects taxes and duties, and through this we have access to, and are able to provide statistical information and analysis of, tax returns and tax receipts. While it is our role to provide facts and advice to inform the policy-making process, it would be inappropriate for us to make any comment on policy matters.

As the committee will be aware, at the introduction of local property tax in 2013, property owners were asked to self-assess the valuation band on their property on 1 May 2013. The original intention was for this valuation to hold for the purposes of LPT until the end of 2016. At the time of the first valuation in 2013, Revenue provided extensive valuation guidance to property owners, including an interactive tool on our website and estimates generated with the returns that were sent out to owners. We ran media and communication campaigns to ensure that property owners were aware of their obligations to assist in meeting these. In 2015, the Minister for Finance published a review of local property tax implementation by Dr. John Thornhill, which was informed by a public consultation exercise. Revenue and Department of Finance officials provided information and secretarial support to Dr. Thornhill's review.

Dr. Thornhill notes the successful response of the Office of the Revenue Commissioners and its staff to the challenge of setting up the new assessment and collection arrangements for this tax. It should be noted also that compliance with LPT is high, at 97% or 98% for each year of operation so far.

Our most recent statistics for LPT at the end of October 2017 indicate the compliance rate for 2017 is also around 97%.

The valuation period was extended from 31 October 2016 on foot of the Finance (Local Property Tax) (Amendment) Act 2015. The current valuation period is now 1 May 2013 to 31 October 2019. At the end of the current valuation period, under the current legislation, owners will be expected to value their properties on 1 November 2019 and this will form the basis for the subsequent valuation period. Revenue intends to run a compliance communications campaign to assist property owners to value their properties and file their returns in the run up to this valuation date.

In the context of the possible budgetary implication of LPT revaluation, it may be of interest to the committee to note that as part of the Thornhill review, the Department of Finance undertook an analysis of the implications of property price increases for LPT liabilities. At the time of the review in 2015, property prices had risen by 26% nationally and 41% in Dublin since May 2013. This analysis indicates that based on property prices at that time in 2015, 48% of properties would have remained in their original valuation band and thus not generated any increase in liability; 35% of properties would have moved by one band and thus generated an increased annual liability of €90; and the remaining 17% of properties would have moved by two or more bands. While more indepth analysis will be required to update this work, it is important to note that this indicates that property price increases do not necessarily translate into liability increases in many cases because of the valuation banding system in LPT. The Thornhill review made a number of recommendations, some of which have been implemented since. Any further policy decisions on LPT remain a matter for the Department and the Minister.

I will now turn to costings on taxation matters. An important part of Revenue's role is the provision of high quality advice and support to the Department of Finance and, through the Department, to the Government and the Oireachtas in the development of tax policy. To assist with this objective, Revenue decided from 2014 to move all of our published statistics derived from tax receipts and returns to a new and dedicated section of our website revenue.ie. This has significantly enhanced the service we provide to policy makers in a number of ways. Statistics published online, of which we now have over 100 datasets, are published in accessible and machine readable formats. As well as making it easier for researchers to query and join our data, our approach means we are at the forefront of the Government's open data initiative. By publishing statistics on our website, we ensure consistency by making the same information available to all. This also enables us to become more effective in the use of our resources. By diverting simpler queries to our website and published material, we also have more time to address more complex or specific queries. I have provided a table that gives more detail on the tables we publish and also on the fact that we answer significant numbers of parliamentary questions. Around one third of those are answered by reference to published material.

With statistics published, they are open to comment or critique. This makes us more accountable and assists in identifying errors, if any. In addition, through 2017, we engaged with the Central Statistics Office to achieve the official statistics accreditation which is a type of quality mark to indicate our statistical processes meet a series of quality standards and principles. In December 2017, the CSO confirmed that Revenue's audited official statistics, which is nearly 50 datasets, can be published under the official statistics quality mark. Revenue is the first Government Department or office outside of the CSO to achieve this standard. Our statistics are also more timely. Whereas previously we published material once a year, we now do so on a regular basis as updated data become available. We have also dedicated statistical releases, for example monthly reports on the help-to-buy scheme, quarterly reports on LPT and annual profiles of the farming sector. All of these statistics complement our more in-depth research papers on particular topics of interest. Perhaps our most significant resource published is our ready reckoner. The ready reckoner shows the estimated Exchequer impact of changing rates, thresholds, bands and more for nearly all of the main taxes. The ready reckoner is updated pre-budget and post-budget based on the most recently available data from tax returns and receipts and so presents our best assessment of current conditions and the impacts of potential changes.

For most taxes, costings presented in the ready reckoner assume no behavioural change and for the majority of cases, this is a reasonable approach unless very significant policy changes are being sought, for example, big increases in rates. An exception to this relates to tobacco products' tax. Revenue's estimated impact of receipts from changes in excise duty on cigarette packets uses the elasticity measure to partially reflect the responsiveness or change of behaviour of smokers following duty and price changes. As research shows that smoker behaviour can be quite variable, a range of estimates is used to reflect this. Variations in tax receipts from tobacco in recent years suggest the use of the range is appropriate but also that the higher end of the range is likely the most suitable to use when undertaking costings.

The committee's invitation notes costings of stamp duty as an interest and these provide a useful case study to outline the method we use to generate costings estimates. To produce costings for a stamp duty change we use data for recent years to estimate the taxable base. This is done on a prudent or conservative basis. In particular, for stamp duty on non-residential property, in estimating the pre-budget 2018 base, the assessment included factoring out a series of very significant transactions in prior years that we deemed to be once-off and thus not likely to reoccur. Had we not done that, the estimated yield would have been higher. In addition, revisions to macroeconomic growth forecasts post-budget suggest a slightly higher potential yield than we would have indicated before the budget.

We have noted that commentary regarding the basis for the stamp duty increase in budget 2018 has not been supported by estimates in market transaction volumes. However, based on revenue returns and actual tax paid with regard to non-residential stamp duty, the considerations in the market are around €9 billion or so over the past three years even when once-off factors are excluded. In summary, Revenue is publishing increasing amounts of information on tax statistics, tax receipts and costings of tax policy options. We do this because we believe it is a key part of our role to bring what facts we can based on tax returns and other data to the tax policy making process. We will answer any questions raised by the committee, subject to the constraints I mentioned in my opening comments.