Paschal Donohoe (Dublin Central, Fine Gael)

I thank the Chair. I appreciate the opportunity to present the Bill to Seanad Éireann. The local property tax has become a well-embedded and established part of our tax structure since it was introduced in 2013. It provides a stable funding base for local authorities and it has raised over €6 billion since it was introduced. The programme for Government contains a clear commitment to ensure fairness and stability in local property tax payments and to continue to retain revenue collected locally in the same local authority. This Bill seeks to amend the charging structure for local property tax in advance of the upcoming revaluation on 1 November. It is necessary that we enact this Bill before the summer recess and I am grateful for the Seanad's facilitation of that.

The most significant proposal in the Bill is a revised method for calculating local property tax liabilities. The new approach maintains the number of valuation bands at 20, with all bands being widened by 20%. Some 96% of homeowners will remain in their existing band. The basic rate of LPT is to be decreased from 0.1029% to 0.0906%, which will apply to properties valued up to €1.26 million. This will result in a small increase in all LPT charges. The fixed charges for bands 1 and 2 will be increased from €90 to €95 for band 1 and from €225 to €235 for band 2. Properties valued between €1.26 million and €2.1 million will be charged at 0.0906% on the first €1.26 million, with a subsequent 0.25% on the balance of a midpoint value in excess of €1.26 million. Properties in band 20 will be charged on individual property values as before, which is to say 0.0906% on the first €1.26 million, 0.25% between €1.26 million and €2.1 million and 0.3% on the balance.

These amendments will ensure that the majority of homeowners remain in the same valuation band while also increasing base charges by a modest amount. The changes are expected to yield an additional €45 million in revenue, which will provide important funding for local services. The Bill proposes to set the duration of the upcoming valuation period to five years, commencing in 2026 and ending in 2030, with future valuation periods also lasting five years. This provides certainty to homeowners about their LPT obligations while ensuring that properties continue to be revalued on a frequent basis. The next revaluation would therefore occur on 1 November.

The system of deferral arrangements is an important support for those who have difficulty paying LPT, so let me provide an update on that and the measures contained in this Bill. The Bill amends the income thresholds for LPT deferrals, increasing them to €25,000 for a single person and €40,000 for a couple. It also provides that the income threshold for a partial deferral be increased to €40,000 for a single person and to €55,000 for a couple. These changes represent an increase of 30% to 40%, depending on personal status and whether the threshold is in respect of full or partial deferral.

Regarding the local authority factor, Senators will be aware that local authorities have the discretion to adjust the LPT rate collected in their areas up or down by 15%. The Bill proposes to allow local authorities to vary the LPT upwards by up to 25% with effect from 2027 onwards. This will provide local authorities with greater flexibility with regard to this tax.

On the matter of adaptation of homes for use by persons with a disability, the Act of 2012 provides for a reduction of €50,000 in the chargeable value of a property for homes that have been adapted for use by a person with a disability. The policy objective is to ensure that disabled homeowners whose properties have realised an increase in value due to necessary adaptations having been made are not liable for a higher LPT charge as a result of these changes. Through this Bill, the valuation bands will be widened to €105,000. Accordingly, the Bill will also allow for a reduction in the chargeable value of a property by this amount for homes that have been adapted in this manner and where the qualifying conditions are met.

I turn to the issue of LPT exemption for homes with defective concrete blocks. The Bill makes a number of amendments to the six-year exemption from LPT for homes that have been damaged by the use of defective concrete blocks. This exemption currently only applies to properties in Donegal and Mayo. The scheme has been extended to Clare, Limerick and Sligo local authorities since the LPT was last amended in 2021. Amendments are being made to update the wording of the exemption to ensure that homes in these additional counties that are eligible for the scheme are also eligible for this LPT exemption, as well as to reflect changes made to the defective concrete block remediation scheme since 2021. These amendments will have no adverse effect on any homeowners presently eligible for the exemption. The Bill also contains two sections that relate to two other taxation matters. The Finance (No. 2) Act 2023 introduced defensive measures in relation to payments leaving our jurisdiction such as interest, royalties, and other distributions, including dividends to jurisdictions on the EU list of non-co-operative jurisdictions for tax purposes and no-tax and zero-tax jurisdictions, to counter aggressive tax planning. The passing of this legislation was also listed as one of the four tax-related milestones in Ireland's national recovery and resilience plan, NRRP, and was the final one to be completed. The Bill provides for a technical amendment which extends the definition of "associated entities" to include entities that are associated by reference to the ownership or control by the same individuals, or individuals connected with those individuals, within the meaning of the Taxes Consolidation Act 1997. This update to the legislation will ensure it operates as intended and future NRRP funding requests will not be hindered.

On a final matter with regard to VAT and the supply of gas and electricity, I introduced a financial resolution in April this year to extend the temporary reduction in VAT on the supply of gas and electricity. This measure was due to expire on 30 April and revert to the original 13.5% rate from 1 May. The financial resolution extends the measure to 31 October this year. The Bill provides for the required legislative basis for the extension. The cost of this is €85 million.

Together with my Government colleagues I have sought to deliver on our programme for Government commitments to ensure fairness and stability in LPT payments. What we seek to achieve is to get the balance right between ensuring LPT charges remain affordable while also generating sufficient revenue to provide for local services. I believe we are getting that balance right. I thank the Senators for their attention and I look forward to hearing their contributions.