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

The family home will be protected. The intention is that the amount of local property tax that will apply will be quite small in relation to the value of the house. In the event of somebody losing his or her job and the family income reducing, the deferral system will kick in and that person can apply for a deferral within the guidelines for deferral. I do not see any circumstances in which anyone would be forced to sell up and move because of the imposition of this charge. As I mentioned, according to the Revenue Commissioners, some 90% of homes in the country are now valued at ¤300,000 or less.

On the issue of the principal private residence, we could do as suggested if it was not administratively difficult. What we should have done was to apply the flat rate property tax and the second home tax for the first six months of the year and then introduce the property tax for the second six months of the year. What we have done is we have abolished the flat rate charge of ¤100 for the first six months of the year, and the property tax which replaces it only kicks in for the second half of the year. Therefore, some people with houses of less value will pay less next year than they paid under the flat rate system.

Due to administrative and Revenue reasons, we decided not to discontinue the second home charge until 2014, so those with second homes will pay the full amount on them for this year. We felt it was a reasonable approach to let that run for another year rather than for those people to pay the local property tax for six months of the year. The argument could be made that that is an anomaly, but that is how we decided to do it, for both administrative reasons and reasons of Revenue flow. The second home tax brings in approximately ¤70 million. Our option was whether we should keep that tax for another 12 months or whether we should cut something else. That is the same kind of argument the Seanad had on the Social Welfare Bill about a cut of ¤26 million. By keeping this tax for another year, we bring in ¤70 million. One can see how tight things would be if we had to find that amount elsewhere in the budget. I agree there is an anomaly, but it is not a very significant one.

In terms of legislation for this, there are provisions in the legal system to collect the second home charge. Therefore, when we discontinue that charge, we can pick up on it in the Finance Bill for 2014 or on some other suitable occasion and remove it from the system. The intention is that the flat rate charge will be discontinued from 1 January, the new local property tax will commence on 1 July and the second home charge will continue for 2013, but will be discontinued from 1 January 2014.