Clare Daly (Dublin North, Socialist Party)
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7. To ask the Minister for Finance the full costs of the implementation of the property tax to date, with particular reference to the cost of reissuing the latest letter seeking payment; the amount that has been paid to contractor providers; the number of staff of these providers that are working full time for the Revenue Commissioners and the cost of same; and the cost of the operation of the website and any other payments. [49077/13]

Clare Daly (Dublin North, Socialist Party)
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The Minister may believe that, as a result of the draconian manner in which the property tax was implemented, the Government has secured acquiescence to the tax. That is not the case. I wonder what is the cost of the recent debacles in handling the tax which added insult to injury among homeowners. I refer to the recent letters issued by the Revenue Commissioners and the cost of that operation, the mistake regarding first-time buyers and so forth.

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that the introduction of the local property tax amounts to the largest ever extension of the self-assessment system and represents a significant administrative challenge. The expenditure report for 2013, which was published by the Department of Public Expenditure and Reform in December last, makes a provision of €25.9 million in 2013 for the implementation of the local property tax. I am advised by the Revenue Commissioners that the total costs incurred in establishing the local property tax to the end of October 2013 is €24.29 million, of which €21.98 million was incurred in 2013. Also by the end of October, more than 1.6 million local property tax returns had been filed for 2013 and approximately €215 million had been transferred by Revenue to the Exchequer. I understand from Revenue that more than 500,000 returns have now been filed in respect of 2014.

The Deputy asked about the "cost of reissuing the latest letter seeking payment" but I am advised by the Revenue Commissioners that no letters were reissued. She may be referring to the fact that letters were issued in October to some 988,000 property owners who paid their 2013 local property tax by lump sum, that is, by debit or credit card, cash, cheque or postal order or single debit authority, or by way of regular cash payments through a service provider. These letters were not a reissue but are a normal annual feature of the pay and file season for the local property tax. As I have explained to the House previously in written replies, they ask property owners to decide how they want to pay their local property tax in respect of 2014 and to advise Revenue accordingly.

Of the 988,000 letters, I am informed that approximately 950,000 were issued by post and 37,000 were issued electronically. The specific costs associated with the issue of these letters were €694,136. The figure is broken down as follows:

Postage: €441,762

Advertising:€191,290

Paper:€30,669

Envelopes:€19,495

Printing:€10,920

Total€694,136

Letters were not sent to property owners who paid their 2013 local property tax deduction at source from salary or occupational pension, from certain Government payments or direct debit, or to those who opted to defer their full local property tax liability or those who claimed an exemption, as all these options will continue to apply for 2014. This approach had the effect of reducing the cost by some €200,000. No action is required to be taken by these property owners, unless they wish to change to a different payment method for 2014.

On the cost and number of contractors, the Revenue Commissioners have advised me that in the context of the local property tax, external contractors have mainly been engaged in two different functional areas, namely information technology development and the provision of call centre services. The call centre costs are published on a quarterly basis on the Revenue website in accordance with Government policy that all payments exceeding €20,000 be published. A total of €2.712 million has been paid to date in 2013.

A key aspect of the service provided to Revenue is the capacity to scale resources up and down in response to demand. At the outset, in March 2013, 40 agents were engaged. To support the filing dates in May 2013, up to 200 agents were engaged. The numbers were reduced after the filing dates and the numbers engaged during the months of July, August and September were at maintenance levels only. With effect from mid-October, there was a requirement to increase capacity to handle the 2014 filing dates and the number of agents engaged is increasing incrementally to the same levels as May 2013. A total of €6.903 million has been paid to external IT systems developers in 2013 and the average number of whole-time equivalent staff working on IT developments was 38.

In addition to external resources, at the end of October 2013, 163 whole-time equivalent Revenue staff and 75 temporary clerical officers were assigned to full-time duties related to the administration of the local property tax.

The total costs incurred in setting up the local property tax to the end of October 2013 under the main headings are as follows. These are fully in line with the provisions made in the 2013 expenditure report.

I am also advised that the operation of the local property tax website, like Revenue’s other online services, is part of Revenue’s normal business and there are no outsourced elements. The local property tax website uses existing equipment and services and has little or no additional overhead cost.

Clare Daly (Dublin North, Socialist Party)
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I will study the reply as it was difficult to follow the detail on the costs of envelopes, stamps, etc., without having the written information to hand. As the Minister indicated, the introduction of the property tax is a major change to the taxation system. Does he accept that the manner in which the Government forced through the draconian property tax legislation last year caused great hardship and resulted in many errors in its implementation? The recent letters, which have been discussed at length, caused serious disquiet and will have to be clarified, which is not good enough. Tens of millions of euro have been spent on the administration of the local property charge. Against the background of our earlier discussion on the ongoing problem of mortgage arrears and the number of people in arrears, is it not time the Government conceded the tax is unsustainable and considered alternatives, rather than continuing with the mistakes the Minister has presided over?

Michael Noonan (Limerick City, Fine Gael)
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As all Deputies are aware, the implementation of a property tax was always going to be difficult, especially when it was being resisted by many Deputies and groups in the House and many organised groups outside the House. Nobody ever made light of the task of implementing the tax. Notwithstanding the difficulty in introducing it, when one takes everything into account, the Revenue did a very good job and achieved a high level of compliance, more than 90%, last year. While a difficulty arose earlier in the year, the system is on track again and it seems it will operate reasonably well again from the point of view of compliance and revenue generation in 2014.

Clare Daly (Dublin North, Socialist Party)
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While the Government may have succeeded in securing majority compliance, resistance to the property tax continues. The draconian nature of the legislation compelled compliance but that does not mean people agree with the tax. How much did the error regarding first-time buyers cost? Is it anticipated that other mistakes will come to light?

Michael Noonan (Limerick City, Fine Gael)
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We always intended, as a kind of incentive to the property market, that those who bought houses in 2013 would be exempt from property tax, but there was an error in the drafting of the Bill which was brought to my attention last spring. Rather than announce something that might adversely affect the property market, particularly in Dublin, which was just about to take off at the time, we said we would leave it go and correct it at the end of the year. The cost of it was somewhere just in excess of €3 million. If this error had not occurred in the draft, the Revenue would have collected slightly in excess of €3 million extra in the course of 2013.