David Stanton (Cork East, Fine Gael) | Oireachtas source

I thank the Senator on behalf of the Minister for Finance for raising this matter. The Minister sends his apologises. He is in the Dail taking parliamentary questions as we speak and, therefore, cannot be here.

In 2018, the Minister for Finance announced a review of the local property tax, which is looking in particular at the impact on local property tax liabilities of property price developments. In that regard, the review is informed by the desirability of achieving relative stability, both over the short and longer term, 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.

I understand the Minister expects to receive the review report very shortly. He will then consider the report carefully before making recommendations to the Government on the local property tax. The Minister is conscious of the need to make the future position on local property tax clear so that households will know in advance of November 2019 what the Government's plans are for the tax.

The local property tax, as the Senator said, is an annually recurring tax applying to most residential properties owned on a specific liability date. The tax is currently linked to the market value of the property as at 1 May 2013. The legislative basis for the local property tax is the Finance (Local Property Tax) Act 2012, as amended. The Revenue Commissioners have operational responsibility for the administration of the local property tax. It has been collected by the Revenue Commissioners since it commenced and this continues to be the case.

The local property tax has broadened the domestic tax base and provided a new source of revenue for local authorities to replace some of the revenue from transaction based taxes with an annual recurring property tax. Our dependence in the past on transaction based taxes proved to be an unstable foundation for Government revenue. In contrast, the experience internationally has been that taxes on property provide a steady and secure source of funding.

The local property tax is producing a stable revenue yield for local authorities, although both yields and tax rates are modest by international standards. The charging structure for the local property tax 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. At the end of 2018 and since its inception the local property tax has contributed €2.7 billion to the funding of local authorities.

Since 1 January 2015, elected members of local authorities have had discretion to vary the local property tax rates up or down by 15%. Where a local authority decides to reduce the local property tax rate, it forgoes the equivalent amount of the reduced local property tax yield from its allocation. If a local authority votes to increase the local property tax rate above the basic rate, it receives the full amount of the increased yield. We understand that five local authorities voted to increase their local property tax above the basic rate in 2019 and four decided on a reduced rate.

The introduction of the local property tax in 2013 was the largest extension of self-assessment in the history of the State, with more than 1.3 million taxpayers obliged to file local property tax returns and pay the tax in respect of approximately 1.9 million properties. The first valuation date was 1 May 2013. The valuations declared for that date determined tax liabilities for 2013, half year, 2014, 2015 and 2016. The Finance (Local Property Tax) (Amendment) Act 2015 gave effect to the postponement of the revaluation date of residential property for local property tax purposes to November 2019. The postponement to November 2019 of the revaluation date for local property tax means that homeowners were not faced with significant increases in their local property tax for 2017, 2018 and 2019 as a result of increased property values.

The Revenue Commissioners publish comprehensive local property tax statistics on a quarterly and annual basis, which includes information regarding collection and compliance, exemptions and deferrals, and payment types, and some of this is broken down by local authority. The compliance rate for 2018 was 97%, which is line with rates in previous years.

The report on the review of local property tax will be with the Minister shortly and he will then be a position to make recommendations to Government about the tax.