Ciarán Cuffe (Dún Laoghaire, Green Party)

The Local Government (Charges) Act 2009 gave effect to the Government's budget 2009 decision to introduce an annual charge on non-principal private residences. The charge was set at €200 and liability for it falls, in the main, on owners of rental, holiday and vacant properties. The intention behind the introduction of the charge was not only to help close the gap between expenditure and revenue but also to broaden the revenue base of local authorities. Proceeds from the charge are being paid to and retained by local authorities and are being used to fund the provision of local services.

The introduction of the charge was significant in that it represented a dedicated new source of funding for local authorities. Senators will be aware that the need for local authorities to have access to additional sources of local finance has been a topic of regular mention. It has been observed that by international standards, the revenue base of local authorities can be viewed as being relatively narrow, with local authorities here being disproportionately dependent on central government funding. The Act is important in that it introduces a relatively stable local source of funding for local authorities that is not, among other things, subject to the volatility associated with transaction-based activity. As such, it represents an important step change in how local government is financed.

The Act is structured from a starting position of a universal liability for the charge in respect of residential property. Liability arises each year on a point-in-time basis which, from 2010 onwards, is 31 March in each year. A number of exemptions from the charge are included, the most significant being where a property is the owner's sole or main residence.

The charge can be viewed as a type of self-assessment because it is for the owner of the property in question to assess in the first instance whether there is a liability to pay the charge. Given the relatively modest level at which the charge is set, it was considered important to minimise the costs associated with its collection. Accordingly, local authorities are not required to issue bills or invoices for the charge. In many cases local authorities have been proactive in reminding individuals who registered property in 2009 of any liability arising in 2010. Some local authorities have sent text message reminders to customers who provided mobile phone numbers, while others have written to customers who registered and paid in 2009.

While the Act does not place any onus on local authorities to issue reminders and doing so is entirely at the discretion of the local authority, the Department of the Environment, Heritage and Local Government continues to emphasise to local authorities the importance of good customer service in this regard. The introduction of any compulsory invoicing procedure in respect of the non-principal private residence charge would make it significantly less cost-effective to operate and increase the administrative and resource burden in its implementation. In the current economic climate, with our emphasis on reducing inefficient work practices as well as public service numbers, such a move would be contradictory and retrograde. I have no doubt the public welcomes efficient practices which mean that less tax paid by the public is spent on bureaucracy and unnecessary and unwieldy administration.

To date, the non-principal private residence charge has raised more than €66 million in respect of 2009 and in excess of €61 million so far in respect of 2010. By these standards, the introduction of the charge has been successful and the figures demonstrate that the public is willing to play its part in keeping costs down and maximising effective use of tax income by being proactive in registering for and paying the charge. I have no plans at this time to amend the legislation dealing with the system of collection of non-principal private residence charges.