Friday, 16 July 2021
Finance (Local Property Tax) (Amendment) Bill 2021: Committee and Remaining Stages
Paschal Donohoe (Dublin Central, Fine Gael)
Senator Higgins's contribution regarding a potential vacant homes tax highlighted an open issue which demonstrates the need for the collection of further information in this respect.It is a very reasonable and understandable position to adopt. She said she was in favour of such a vacant homes tax, with certain caveats, and that is a very understandable and legitimate position to take. My expectation is that once we get into a debate on what those caveats are, it will pose a question regarding the utility of the tax in the first place. If more exemptions are put in place, it is possible that the number of properties that are affected by such a tax could begin to decrease quite quickly. The truth of it is that none of us knows yet what that trade-off is because we do not have the kind of valid and hard data needed to answer those questions. For example, if such a tax is introduced, should it be implemented differently in areas that are rent pressure zones as opposed to areas that are not? When we begin a debate on exemptions, if we get to such a point, should we provide an exemption for a home that is empty for family reasons? If so, how many of those homes are there? If we are going to provide such an exemption, for how long should such a home be empty in the context of the trade-off if that home was used in another way to provide a new home to a different person? These are all trade-offs we will need to discuss.
I predict that if we get to a point where I make a proposal in regard to such a tax, the call for such a tax to be implemented will be quickly followed by many legitimate cases that are made for exemptions from that tax. It is in an effort to get ready for such a potential point that I believe there is real value in, once and for all, getting a dataset in place so we can have that debate.
I entirely agree with the point made by Senator Higgins that if we are looking at the implementation of such a tax, the mere signalling effect of such a debate beginning can, of itself, have a value. I think we will begin to see such signals develop when we get to a point where taxpayers paying the local property tax electronically can go onto the portal and tick a box to indicate that a home is vacant and, if so, why.
In regard to the Senator's point on how long it will take for that tax to be implemented and the role this data could play, first, if we generate enough data that indicates there is a solid basis for such a tax to be introduced, I will not be waiting for the next revaluation date. If and when information becomes available to me that shows there is genuinely a group of homes that we believe are empty for longer than the Oireachtas feels to be worthwhile, and we want to tax that, my intention would be to not wait until the further revaluation happens. The reason for that is, of course, the great challenges we face in providing enough homes for those we represent and serve.
In regard to the limitations that are in place with regard to data collection under this Bill, these limitations were put in place after we consulted with the Data Protection Commissioner. It is the view of the Data Protection Commissioner that such limitations are required, and we need to be consistent with regard to the advice that we receive.
On the amendments put forward by Senator Higgins, amendment No. 4 would remove any limitation as to what that data could be used for and I do not believe that would be appropriate. As interested as I am in seeing what this data would be, there should be limitations in place regarding what that data could be used for in the future. If Senator Higgins believes there are too many limitations in place, I would say to her that having no limitations at all is equally problematic. Amendments Nos. 5 and 6 extend this limitation for the purposes of a future levy or future tax. Amendments Nos. 5 and 6 are, therefore, inconsistent with amendment No. 4, given that amendment No. 4 refers to no limitations and amendments Nos. 5 and 6 state that there should be limitations in regard to how this data could be used. Moreover, I ask the Senator to consider how appropriate it is to collect personal data for use in regard to a tax that does not yet exist. There are important issues that mean it is not appropriate at this point to accept the amendments.
In regard to this data and information, and its role in the actual execution of the tax, if I recommend to Government and the Oireachtas that we go ahead with this, and if we go ahead with a vacant homes tax, that would be in the context of the local property tax regime. The local property tax regime is based on the principle of self-valuation, so we then have to ask homeowners to form a view themselves in regard to whether their home meets the criteria of vacancy that could be set out in a future potential tax. Therefore, in any event, even if I accepted Senator Higgins's amendments and believed that, in particular, amendments Nos. 5 and 6 should be accepted, and if the Government and the Oireachtas decide to deal with the issue of vacancy through the local property tax regime, that local property tax regime is fundamentally based on the principle of self-valuation. We would then be asking homeowners to say to us whether their home is meeting the criteria of a new area of the local property tax structure. This would mean we would have to question the value and utility of the data we have collected up to that point, beyond what I am looking to use it for, which is to answer the question of whether this tax is needed and, if it is needed, what would be the number of homes it could affect the use of.
It is for those reasons that I am not in a position to accept Senator Higgins's amendments. Nonetheless, her contribution raises very valuable issues that we will be coming back to, which are the trade-off between the breadth of a tax base and the exemptions to that base and, if more and more exemptions are put in place, what is the impact on that tax. However, in order to cross that bridge, the first bridge we have to get to is understanding how many homes could be affected by such a regime, and that is what we are looking to do here.