Seán Canney (Galway East, Independent) | Oireachtas source

Another important dimension of taxation equity is described as vertical equity. Essentially, the concept is that people who are better off should contribute more than those who are less well off. The local property tax fulfils this important principle as the owners of the most valuable properties pay the most. Properties valued at more than €1 million are subject to a higher rate of local property tax, at 0.25% on the excess over €1 million. The local property tax legislation also provides appropriate measures on ability to pay and is now established as an important element of our taxation system. For individuals on low incomes, the local property tax legislation provides for the possibility of deferring the charge to local property tax in certain circumstances. To qualify for a deferral the residential property must be occupied as a sole or main residence. The income thresholds for such a deferral are €15,000 for a single person and €25,000 for a couple, regardless of whether they are married persons, civil partners or cohabitants. A higher income threshold applies where a residential property is occupied as a sole or main residence and subject to a mortgage. In such cases, the gross income may be increased by 80% of the mortgage interest payments.

Deputies will be aware that another review of the local property tax has been under way involving a number of Departments and the Revenue Commissioners. The review has been focusing on the impact of property price developments on local property tax liabilities. The review is informed by the desirability of achieving relative stability, over the short and longer terms, in local property tax payments of those liable for the tax and the need to provide clear direction on the likely payments faced by households in 2020. A number of submissions were received in response to a public consultation process that was conducted as part of the review and these have provided important input to the review. The Minister for Finance will receive this report and make recommendations to the Government thereafter.

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