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

I thank the Senator and I have listened carefully to what she said. As was indicated, addressing vacancy and maximising the use of the existing housing stock is a priority objective for this Government and for everybody with an interest in the housing situation. In Housing for All, the Government has set out a suite of incentives available to encourage the reuse of properties and increase the supply of housing. In addition, the Government is committed to exploring options around sanctions for non-use of residential properties so that there is some penalty for leaving a home vacant for a prolonged period of time without a genuine reason. This is why the Minister announced the introduction of the vacant homes tax in budget 2023.

The case has been well-made in the recommendations for reports on various aspects of the tax, including the duration of vacancy; the rate at which it is charged; options to include derelict properties; and a definition of market trends. As with all new tax measures introduced, my Department will monitor the tax and if it is not considered to be effective in bringing more properties into use, the Minister will have no hesitation in reviewing the measures and how it actually operates.

The rate of tax has been the main issue discussed here, even though we have touched already on the duration of the vacancy. That has been well discussed. The issue of derelict properties has been raised. On the rate of tax, in developing the new tax, an important consideration was simplicity. That is extremely important. Taxes which are simple and easy for people to understand and make the required payment and administered easily by Revenue are normally the best sort of taxes, rather than a very convoluted tax where people might have to engage professional advisers to assist them make the return. We want to avoid all that because if it is simple and straightforward, people can understand it and file the returns themselves. It is important to ensure the tax is easy to understand and administer. This is why the Minister has set the rate of the vacant home tax as a multiple of the property tax base for the local property tax, LPT, charge as the LPT system is simple and well understood.

While Senators recommend that the Department considers a variable rate of vacant homes tax, I note the price growth and rent increases do not take place evenly nationwide. While one county might see a significant rise in prices and another may remain at more or less stable prices, vacant home tax will apply nationally without variation or the rate in the region. As a result, the tax is easily understood which in turn supports compliance. A variable rate would also be more costly to administer. This is a national tax. It is not like rates where the local authority in one county has a rate which is different from the adjoining county.

The important issue here is that this is a national issue and one rate is set nationally by the Oireachtas and implemented by the Revenue Commissioners on a self-assessment basis. That is the reason that having variations, depending on how properties go up in value at different rates in different counties, would make this more difficult to administer.

While a higher rate would mean a greater yield, the policy intent of the vacant homes tax is to raise revenue. In setting the appropriate rate of tax, care must be taken to get the balance right between achieving the objective of encouraging the use of available housing without excessively penalising a limited group of property owners. However, as I said previously, the Department will monitor the operation of the tax, including the effectiveness of the rate in bringing more property into active use. As I outlined, the tax is a new measure. It is important to see how it operates after coming into effect and then make an assessment as to whether or not it is working. However, this will occur as part of the ordinary policy monitoring process conducted by the Department and the Revenue Commissioners. The Department will monitor the tax and if problems arise over it or if it proves ineffective, the Minister will be happy to review any of the matters outlined and I am satisfied the matters raised by the Senators will be sufficiently considered through appropriate channels in due course once the tax comes into operation. For these reasons, I do not propose to accept the recommendation proposed by the Senator.