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

I move: "That the Bill be now read a Second Time."

The Finance (Local Property Tax) Bill 2012 was enacted into law following its signature by the President on 26 December 2012. I signed the commencement order bringing the Act, other than sections 19 to 21, inclusive, into operation with effect from 1 January 2013. Sections 19 to 21, inclusive, which relate to the local adjustment factor will come into operation with effect from 1 May 2014.

The introduction of the Finance (Local Property Tax) Act 2012 met one of our programme commitments to the troika, which had to be completed by the end of 2012. To remind those in the House who appear to have forgotten, this commitment was entered into by the previous Fianna Fáil Government. Given this troika commitment and the Government's determination to fix the national finances in a manner which supports job creation, we have chosen to implement the local property tax. The latter will keep taxes on jobs such as income tax unchanged. Recent ESRI research shows that a property tax has the advantage of being 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 and yesterday's employment figures for the last quarter of 2012 were encouraging, representing the first annual increase in employment recorded since 2008.

The Bill before the House is being introduced to give effect to commitments I made during the passage of Finance (Local Property Tax) Bill 2012 through the Houses last December, in addition to some further issues that have since been raised and some minor technical amendments. Before I go through the Bill in detail, I draw the attention of the House to the key amendments contained in it which I view as positive.

I have agreed with my colleague, the Minister for Environment, Community and Local Government, Deputy Phil Hogan, that houses demonstrated to be subject to a certifiable level of pyrite heave should receive an exemption from local property tax. The exemption may be claimed for three consecutive liability dates. The Minister will provide regulations stipulating how residential properties should be tested for pyrite-induced damage. The regulations will also provide for the issuing of a certificate in respect of a property that has been verified as having a level of damage significant enough to warrant exemption.

Like my colleagues in government, I am conscious of the difficulty some home owners are experiencing in meeting their mortgage obligations. Under proposed new amendments, a person who has entered into an insolvency arrangement, that is, a debt settlement arrangement or a personal insolvency arrangement, under the Personal Insolvency Act 2012 may qualify for a deferral of local property tax which falls due for payment by that person during the period for which the insolvency arrangement is in effect where a valid claim is made to the Revenue Commissioners. Further proposed new measures provide for the possibility of a deferral for liable persons who cannot, without excessive hardship, pay local property tax when it becomes payable as a consequence of a significant and unexpected financial loss or expense. This deferral will operate on a different basis from deferral arrangements provided for in the original Act. A liable person must apply in writing to the Revenue Commissioners for the deferral and meet the criteria that will be set out in guidelines to be published by the Revenue Commissioners. Deferral cannot commence until the Revenue Commissioners have received from the liable person whatever information and documentation they require to make a decision and, having made their decision, notify the liable person that a deferral is allowed, subject to whatever conditions they may impose in accordance with the guidelines they will publish.

The Bill allows for a reduction in the chargeable value of a relevant residential property that has been adapted for occupation by a disabled person where the adaptation has been grant-aided by a local authority. The reduction is limited to the lesser of the chargeable value attributable to the adaptation work carried out on the property and the maximum grant payable under the relevant local authority scheme. The relief will not apply after the sale or transfer of the property, unless the person with the disability continues to reside there. The Bill also provides for an exemption for a residential property that is purchased or adapted for use as a sole or main residence by an incapacitated individual where an award has been made by the Personal Injuries Assessment Board or a court or where a trust has been established specifically for the benefit of permanently and totally incapacitated individuals. To be exempt from payment of the local property tax, a residential property must be acquired for or adapted to make it suitable for occupation by an incapacitated individual. To avail of the exemption in cases of adaptations, the adaptation costs must be greater than 25% of the chargeable value of the property before such work took place. The exemption will no longer apply if the property is sold and the incapacitated individual no longer occupies in it as his or her sole or main residence.

The Bill will allow a personal representative of a deceased liable person where that person was the sole liable person in relation to a residential property to qualify for a deferral on making the required valid claim. The deferral may be claimed in respect of local property tax that was due and unpaid at the time of the liable person's death, that was deferred by the deceased liable person or that falls due in the three years immediately following death. The Bill limits the period of time for which personal representatives may qualify for a deferral to the years commencing with the date of death. If, however, the personal representatives are in a position to transfer the property to a beneficiary or distribute the proceeds where the property must be sold, the period of deferral will end at that point. In all cases, the personal representatives will be responsible for payment of the deferred local property tax when the period of deferral comes to an end.

I previously indicated that properties used for accommodation purposes by groups such as the Irish Girl Guides would receive an exemption from local property tax. This was on foot of a commitment I gave during the Seanad debate on the Finance (Local Property Tax) Act 2012.

The Bill now provides for an exemption for residential properties used by a charitable body for recreational activities connected with its charitable purpose where this is not done on a commercial basis.

The chargeable value of all properties for which the liable person is a local authority or an approved housing body will be deemed to be within the first valuation band for the first valuation period, that is, up to 31 October 2016. Local authorities and approved housing bodies may also defer their 2013 local property tax liability until 2014. This is to allow such bodies to put in place arrangements for the payment of the tax and the valuation of their properties.

An amendment proposed to deal with issues arising where there is a change of liable person between valuation dates has been the focus of much media and Opposition attention in recent weeks. Where the liable person changes between valuation dates, the vendor will be obliged to provide the purchaser with details of the chargeable value established on the first valuation date, with any relevant documentation. Failure to comply may result in a fine of €500 being imposed on the seller of the property. The new owner is obliged to submit a revised return and chargeable value for the next liability date where it appears to him or her that the chargeable value declared by the previous liable person was too low, given the circumstances that would have prevailed at the time the chargeable value was established.

These amendments are intended to act as a deterrent against under-declaration of the chargeable value of a relevant residential property by a liable person who intends to sell the property before the next valuation date. Contrary to media coverage and Opposition commentary, the new provision offers a level of protection for purchasers. In the absence of this amendment, a deliberate and serious under-declaration of a property's value would be binding on a new owner or liable person where a property was sold before the next valuation date.

I will now outline the main sections of the Bill. Section 1 defines the "Principal Act" as the Finance (Local Property Tax) Act 2012. Section 2 amends Part 2 of the Act by providing for exemptions from local property tax for residential properties used by a charitable body for recreational activities connected with its charitable purpose and for residential properties purchased or adapted for occupation by permanently and totally incapacitated individuals. I outlined these new exemptions.

Section 3 amends Part 2 of the Finance (Local Property Tax) Act 2012 to provide for an exemption for a temporary period of at least three years for residential properties affected by a significant level of pyrite-induced damage. Section 4 amends Part 3 of the Act to clarify how the Act will apply in a number of situations where an occupier of a residential property has not taken steps to establish title to the property.

Section 5 makes several amendments to Part 4 of the Act relating to the charging provisions such as valuation of property and the rate of tax to be applied. Paragraphs (a) and (b) make amendments to section 14 that are linked with an amendment made to section 35. As I said previously, these amendments are intended to act as a deterrent against under-declaration of the chargeable value of a relevant residential property by a liable person who intends to sell the property before the next valuation date. Paragraphs (c) to (k), inclusive, are a combination of minor technical amendments and amendments that clarify the operation of the Act regarding the local adjustment factor.

Section 6 inserts a new section 15A into the Finance (Local Property Tax) Act 2012 providing for a reduction in the chargeable value of a relevant residential property adapted for occupation by a disabled person where the adaptation has been grant-aided by a local authority. Section 7 deals with residential properties in regard to which the liable person is a local authority or an approved housing body. The chargeable value of such properties is deemed to fall into the first valuation band, that is, zero to €100,000, until 1 November 2016, the valuation date for 2017. In addition, the payable date for the 2013 local property tax liability is extended to 1 January 2014. The effect of this is that the charge on all local authority houses and the charge on voluntary houses liable to property tax will be €45 for 2013 and €90 for subsequent years until the next revaluation date. Many Deputies were concerned about this issue and that is the new legal position.

Section 8 makes several amendments to Part 7 of the Finance (Local Property Tax) Act 2012 regarding the return to be prepared and delivered to the Revenue Commissioners by a liable person. Paragraphs (a) to (c) are minor technical amendments. Paragraph (d) is linked with the amendments in section 5. Paragraph (e) substitutes more comprehensive provisions for section 38 of the Act dealing with the linkage between late submission of a local property tax return and the submission of a return for income tax or corporation tax. Late delivery of a local property tax return can result in an income tax or corporation tax surcharge under section 1084(2) of the Taxes Consolidation Act 1997. Paragraph (f) makes a minor technical amendment.

Section 9 makes several amendments to Part 8 of the Finance (Local Property Tax) Act 2012 as regards estimates and assessments of local property tax made by the Revenue Commissioners. Paragraph (b) will facilitate notification of Revenue estimates by electronic means. Paragraph (c) facilitates appeals where an assessment is made in respect of more than one property. The other amendments are technical in nature.

Section 10 amends Part 9 of the Act to allow an appeal by a liable person against a determination of the Appeal Commissioners to be heard by the Circuit Court. This is in line with appeal provisions in other areas of the tax code. Paragraph (c) amends section 63 in order that the Appeal Commissioners can require a liable person to provide information on any property, not just a relevant residential property.

Section 11 makes several amendments to Part 10 of the Act as regards the deduction of local property tax at source by employers, occupational pension providers and the Departments of Social Protection and Agriculture, Food and the Marine. Paragraph (a) amends the definition of "net emoluments" in section 64 in two respects. First, it gives priority over local property tax to deductions by an employer or occupational pension provider under a court order such as an order for the payment of maintenance, where such an order was issued before the direction to deduct local property tax was issued by the Revenue Commissioners. Second, it allows deductions of local property tax to be made from a repayment of income tax, PRSI or universal social charge by an employer or occupational pension provider to a liable person. Paragraphs (b) to (g), inclusive, make minor technical amendments to ensure the formulation used in several provisions is consistent and clear.

Section 12 makes several amendments to Part 11 of the Act regarding the collection and enforcement of local property tax by the Revenue Commissioners. Paragraph (a) amends section 119 to clarify that local property tax is due on a liability date but may be paid on or before a subsequent date. For example, the liability date for 2013 is 1 May. However, initial payments may be made on or before 1 July. Similar provisions will apply in respect of future years. Paragraph (b) amends section 120 regarding a direction given by the Revenue Commissioners to employers, occupational pension providers and the Departments of Social Protection and Agriculture, Food and the Marine to deduct local property tax at source when making payments to a liable person. New subsections (2) and (3) disapply the requirement for the Collector-General to issue a demand for outstanding tax when such a direction is given and allow the direction to be given after local property tax is due but before it is payable. However, tax need not be deducted until it is payable. Paragraphs (c) and (d) are intended to clarify the original provisions. Paragraphs (e) and (f) insert a new subsection (2) into section 126 to require a liable person who sells or otherwise transfers a relevant residential property after local property tax is due but before it is payable to pay that tax on completion of the sale or transfer. Paragraph (g) inserts a new section 147A that establishes a way of determining a liable person's local property tax liability for the purpose of charging a tax geared penalty, that is, a penalty which is a proportion of the outstanding tax rather than a flat amount.

Section 13 amends Part 12 of the Finance (Local Property Tax) Act 2012 to introduce three additional categories that may qualify for a deferral of local property tax. As I outlined earlier, these are the personal representatives of a deceased liable person, an individual who enters into an insolvency arrangement under the Personal Insolvency Act 2012 and those who satisfy the Revenue Commissioners that they have experienced a significant and unexpected financial loss or expense and where, as a consequence, payment of the tax would entail excessive hardship. Paragraphs (e), (f) and (g) of section 13 are minor technical amendments.

Section 14 amends section 1094(1) of the Taxes Consolidation Act 1997 to ensure that outstanding local property tax liabilities are taken into account when tax clearance certificates are being sought in regard to the issue of certain licences, for example, for the sale of alcohol. Section 1095 containing the general tax clearance certificate provisions already applies in relation to outstanding local property tax liabilities. Section 15 makes minor technical amendments to several parts of the Finance (Local Property Tax) Act 2012. Section 16 contains the Short Title of this Bill, that is, the Finance (Local Property Tax) (Amendment) Act 2013.

As I stated earlier, this Bill is being introduced to give effect to previous commitments I and the Government made in regard to the new local property tax. Deputies will be aware of the upcoming May liability date and filing deadlines. In advance of these dates, commencing on 11 March, the Revenue Commissioners plan to do a bulk mail issue of a local property tax guide and return form to all liable persons to assist homeowners to prepare for the new tax. The passing of this legislation at this time will provide certainty to the Revenue Commissioners. It will give homeowners time to consider the guide, to assess their liability and to make their return on time and to assist the smooth implementation of the tax. I commend the Bill to the House.

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