Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I move amendment No. 124:

In page 164, line 18, to delete “sections 175 and 177AE” and substitute “section 175 or 177AE, as the case may be,”

Section 77 of the Finance Bill 2021, as published, introduced Part 22A into the Taxes Consolidation Act 1997, which provides for a residential zoned land tax, RZLT.The zoned land tax contains the provisions which will apply to land zoned and serviced on and from 1 January 2022.This measure is designed to prompt residential development by owners of land that is zoned for residential or mixed use purposes and that is serviced.

I am proposing a number of amendments which can be split into three categories. Amendment 158 introduces section 653AM to deal with situations where nobody has come forward as the owner of a site that is within the scope of this tax. This measure provides that where the owner of such a site does not register with Revenue the site may become the property of the State. If an owner has registered with Revenue, Revenue will use its normal collection mechanisms to collect the tax and interest due. This provision only applies where no owner has been identified. It will only apply where the tax and interest owing and charged on the land exceeds 110% of the market value of the site. Once the amount of unpaid tax and interest exceeds 110% of the market value, the first step is that Revenue will place a notice inIris Oifigiúilsetting out that this process is commencing. After six months, if nobody has come forward and registered as the owner of the land, the Minister for Public Expenditure and Reform can make an application to the High Court to have the site concerned made property of the State. The High Court can then make such directions as it thinks are appropriate in relation to publication or otherwise before making the order sought. While it is envisaged that the Revenue Commissioners will rely on this measure only in limited circumstances, its inclusion is an important tool in targeting non-compliance in circumstances where the tax due on a site within the scope of residential zoned land tax is not paid and the landowner is not forthcoming in meeting its obligations.

Amendments Nos. 131 and 133 place two additional requirements on owners of a site where they are making a submission to the local authority on either a draft map or a supplemental map. These two additional requirements are, first, that the owner's submission includes a map from Ordinance Survey Ireland that clearly identifies the site and, second, the owner may be asked to provide evidence of ownership to the local authority. Both of these additional requirements are necessary to ensure that the appeals procedure, where a landowner can appeal a decision of the local authority, can operate as intended.

Amendments Nos. 160 and 161 seek to provide for reports in regard to the RZLT. On amendment No. 160, the Deputies may note that in setting the initial rate for this tax great care needs to be taken to get the balance right between it achieving its essential purpose of encouraging the release of land for home building purposes, but at the same time not being too penal that it runs the risk of being challenged in the courts. If I were to apply a rate of 25% from the outset, it would change significantly the economics of making a return on capital invested in the land as a business asset and this could make the business model unviable, which would be counterproductive and damaging to the goal of meeting our house building objectives over the next number of years. It is important to see how the tax operates and to then make an assessment as to whether it is working. If it is not leading to an increase in land being released for housing purposes, I will have no hesitation in reviewing the rate, if I deem it likely that this will help the situation. In summary, I believe the 3% rate is an appropriate rate to apply when this tax comes into force in two years' time, as I am of the view it will encourage landowners to either develop their land or sell it to others for development purposes. In doing this, the supply of land available will increase. This should be reflected in a stabilisation of land prices. It is for this purpose, I cannot agree to the amendment seeking this report.

On amendment No. 161 and the Deputies' wish that I produce a report estimating the likely financial impact of the exclusions, exemptions, deferrals and abatements from the residential zoned land tax contained in this section with a view to removing any or all of them before the tax comes into effect my views are as follows. In order for this tax to be effective it is necessary that there be exclusions, including, among other things, residential dwellings and their gardens, certain infrastructure or facilities including utilities, transport, and facilitates for social, community or recreational purposes, business premises in areas zoned for mixed use purposes. Without these exclusions, we would be taxing land on which there was no possibility of any housing development taking place. This would make no sense.

In regard to the issue of deferrals, the Deputies should note that these arise only in very specific circumstances such as, first, where a judicial review has been sought by a third party against the decision of a local authority or An Bord Pleanála in relation to a planning decision. In my view a deferral is fair in such a situation as the matter is out of the control of the developer. The second circumstance is in a situation where a person has commenced development of a site. Since the purpose of the tax is to encourage developers to build on this land, it seems appropriate in my view to suspend the payment of the tax, which continues to accrue, for the duration of the construction period. Should they meet their delivery commitments, then the tax will not be payable, but failure to do so will result in a proportional payment of the suspended tax for the part not completed. This approach is aligned with the philosophy behind this tax of encouraging the construction of houses rather than as a revenue raising measure. For that reason, I cannot agree to this amendment.