Professor Niamh Moloney:

I thank the Deputy for his question. Property tax is a hugely important part of the tax base. When we were framing our work, we looked at the fact that we need to raise revenue and then at how we can do this in the fairest, most equitable and most economically efficient way. Land is a key part of the capital base and the local property tax, LPT, is a very effective and efficient tax. It is a tax that works. It is clear, recurrent, predictable and it does not bring distortions into the property market. We believe it is a tax that can be flexed more. There should be a greater yield from LPT, whether that is by looking at the rates that apply or at the bands and how they work. Property tax is a very efficient form of tax. There is a finite supply of property in the country so how we tax it is not going to generate distortions in the same way that higher rates of tax on labour can, for example, by creating disincentives to work. Corporation tax also has predicted complexities here but property tax is an efficient form of tax. It can also lead to the efficient use of land.

The other part of our recommendations around land was the site value tax. Land, whether it is residential or land that is outside the residential area and not subject to the LPT, is a key part of the base on which we put taxation. One of our key recommendations is the introduction of a site value tax that would apply to all land in the country other than that which is subject to the LPT. This is a stable, recurrent and predictable way of bringing in revenue, it promotes the efficient use of land and it is progressive. In the context of trying to stabilise the tax base, land-based taxes, including the LPT on the one hand and a site value tax on the other, are two of the critical levers we point to in our report as a way of both stabilising and expanding the tax base.