Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I thank Senator Boyhan for raising this matter. He has given a very detailed list of properties that are exempt from the tax introduced in 2013 to provide a stable sustainable funding base for local authorities, broadening general taxation measures. It has raised approximately €3.5 billion to date. Approximately €473 million is raised by the tax per annum. This goes to fund the local authorities. The Senator has clearly outlined the need for such a tax to fund local authorities. The taxation of property through a recurring annual tax is less economically distortionary than tax on either income or capital. Income and capital can increase or decrease whereas property tends to remain fairly steady. It is the norm in international and European jurisdictions to have some level of property tax.

Moving on to what the Senator has said, the 2020 Programme for Government: Our Shared Future includes commitments in respect of local property tax. It provides that legislation will be brought forward for the tax on the basis of fairness and that most homeowners will face no increase. That is a very clear statement. It is also intended to bring new homes, which are currently exempt from the local property tax, into the taxation system and to retain all money collected within the county, which the Senator will be very pleased to hear given that he comes from Dún Laoghaire. This is to be done on the basis of those counties with a lower LPT base having their income adjusted via an annual national equalisation fund, paid from the Exchequer rather than from local property tax paid in other local authority areas.

The Minister for Finance recently announced his intention to advance legislative proposals early in 2021 to implement these commitments. Ideally, legislation to give effect to the LPT measures I have outlined would have been enacted in 2020. However, the protracted nature of the government formation process following the general election in February and the necessary prioritisation and focus on dealing with the impact of the Covid-19 pandemic delayed decision making on the future of the LPT. The Minister was also very conscious of the practicalities and the need to allow Revenue sufficient time. Essentially, because of Covid and a government not being in place, there was not time to do it this year, even though that was what was intended.

The Minister deferred the revaluation due for 1 November 2020 through SI 458 under section 13(3) of the Finance (Local Property Tax) Act 2012. This decision means that taxpayers will not be faced with increases in their LPT bills for 2021 other than what a local authority may choose to apply in its particular area using the local adjustment factor.

As I have said, we are dealing with this issue under the programme for Government. To put a figure on it, the exempt cohort amounts to around 23,000 properties which were in the process of being built or sold during 2013. These were known to exist and are specifically exempt. The Senator has asked that they now be brought into the system. In addition, there is a much bigger category, that of houses that have been built since 2013. They are not exempt because they were never in the net in the first place. We now have exempt properties that were new in 2013 and those that have been built since and were not even included on the register. They are therefore not exempt and also need to be brought in. This change would bring an extra 80,000 houses nationwide into the system.That would result in approximately 100,000 houses being brought into the system overall, and at an average figure of approximately €320 per house, this would bring approximately €32 million into the local property tax fund nationwide, or an additional 7%. That will happen during the coming year.