Seán Kyne (Galway West, Fine Gael) | Oireachtas source

I thank all Members for their contributions to the debate. It is important to bear in mind that the objective of the local property tax is to broaden the domestic tax base and to replace some of the revenue from transaction-based taxes with an annually recurring property tax. We know to our cost how, in the past, our reliance on transaction-based taxes proved to be an unstable source of Government revenue. In contrast, international experience has shown that property taxes are a secure and stable source of funding. I need not remind the House how important stability in our public finances is to the success of our country and economy, particularly as we head into a period of uncertainty. Given that context, it is surprising to hear calls from certain Opposition benches for the removal of the local property tax.

The LPT is producing a stable revenue yield for local authorities although both yields and tax rates are modest by international standards. The charging structure for LPT is progressive. The basic rate of 0.18% applies to property values of up to €1 million with a higher rate of 0.25% applying on the portion of value above the €1 million threshold. In addition to the progressive rate structure, and to the extent that those with higher income or wealth tend to own properties with higher values, this is a progressive tax, particularly over the life cycles of taxpayers. From 1 January 2015, local authorities have had discretion to vary LPT rates by plus or minus 15%. A number of local authorities have exercised this option. Where a local authority decides to reduce the rate, it forgoes the equivalent amount of the reduced LPT yield from its allocation. If a local authority votes to increase the rate above the basic rate, it receives the full amount of the increased yield. I understand that five local authorities voted to increase the tax above the basic rate in 2019 and that four decided on a reduced rate.

By the end of 2018 and since its inception, local property tax has contributed €2.7 billion to the funding of local authorities. The Revenue Commissioners publish comprehensive LPT statistics on quarterly and annual bases, which include information on collection and compliance, exemptions and deferrals and payment types. Some of this is broken down by local authority. The compliance rate for 2018 was 97%, which is line with rates in previous years. Another positive feature of the LPT is that, as a tax on assets not employment, it will not adversely affect job creation. Regarding ability to pay, the LPT legislation has a number of features providing that in certain circumstances a person can defer or partially defer the payment of local property tax. Deferral arrangements are available where there is an inability to pay and certain specified conditions are met. These deferral arrangements were outlined in some detail in earlier remarks.

The LPT is an annual self-assessed tax charged on the market value of residential properties. The Revenue Commissioners are responsible for the administration, collection, enforcement and audit aspects of LPT. The property valuation must be determined on a specific valuation date and it forms the basis for the LPT charge until the next valuation date. The first valuation date for LPT was 1 May 2013 and the valuation of a property set on that date remains valid until 31 October 2019. The 1 May 2013 valuation is not affected by any subsequent improvements or extensions to a residential property. Likewise, where a property is sold during the valuation period and the value of the property has increased, there is no additional LPT liability, provided the initial 2013 valuation was accurate. The local property tax is now a well-established element of our overall taxation system and I consider it important that its position be maintained, as research and experience internationally consistently show that taxes on immovable property are among the taxes that are least detrimental to economic growth.

Deputies will be aware that following a review in 2015, the former Minister for Finance, Deputy Michael Noonan, proposed to Government that the revaluation date for the tax be postponed from 1 November 2016 to 1 November 2019. This postponement meant that homeowners continued to have their homes valued for LPT purposes on the basis of their 1 May 2013 declared valuation and so were not faced with significant increases in their LPT in 2017, 2018 and 2019 as a result of increased property values. If there was no change in this position, the valuations of properties on 1 November 2019 would be the basis for calculating LPT liabilities in 2020 and beyond. That is why the Minister for Finance considered it essential that the terms of reference for the review of the LPT that is concluding should include the principle of achieving relative stability in LPT payments of liable persons both over the short and longer terms. In conclusion, the report on the current review of the tax is being finalised and the Minister for Finance will then be in a position to make recommendations to Government about it.

Deputy Danny Healy-Rae referred made a comparison between Kerry and Cork in respect of similar properties. I understand that Kerry County Council applied a 5% local adjustment factor or increase to LPT, which may account for some of the difference for homes of similar value. A number of Deputies raised issues regarding the Multi-Unit Developments Act 2011. It is not correct that in paying their annual maintenance fees and LPT, owners in multi-unit developments are paying on the double for the same services. They are two distinct and separate charges. The annual maintenance fees associated with multi-unit developments are used to meet the costs incurred in maintaining, managing and refurbishing developments within their boundary walls as well as all related ancillary services for the exclusive benefit of the property owners concerned. LPT proceeds, on the other hand, are used largely to provide and maintain infrastructure, services and other amenities in a general locality which are of benefit to all residents, including the owners in multi-unit developments.

A number of Deputies referred to the taking in charge of estates.

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