Deirdre Clune (Fine Gael)
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I welcome the Minister of State at the Department of Finance, Deputy Brian Hayes. I want to discuss the local property tax. People who live in properties or estates must pay a management fee and the local property tax. The issue of paying twice for local services has been raised with me on at least three occasions over the past number of weeks.

I wish to point out, and I am sure the Minister of State will do the same, that anyone who lives in an apartment complex pays management fees on the entire structure - that is, for internal lighting, lifts and so on, as well as for the external space, which has roads and lighting. Inhabitants must make a contribution and pay a maintenance fee. In some housing estates there is a combination of apartments and houses but all of the inhabitants must pay a management fee.

I am aware the local property tax is deemed to go towards local services which may not be in the immediate vicinity of the development but could be in the greater local area. It raises the question of the need for local authorities to take in charge local housing estates as many of them are not taken in charge. If they are paying management fees do the Minister for the Environment, Community and Local Government and the Minister for Finance have plans to ensure that councils can move forward in taking in charge these housing estates because the residents consider that as they are paying the local property tax they are at a disadvantage compared to their neighbours? That is an issue that should be progressed and it should be established that there is a norm for everybody. For too long I have witnessed in my area councils not availing of the opportunity to take in charge housing estates, perhaps, because the developer did not propose it but they should be more proactive in that area. The roads and the internal services in those housing estates can deteriorate and a point is reached where the taxpayer cannot take it on. It becomes a vicious circle. To answer those people, do we have a plan and, if so, where is it, given that they consider they are paying twice for local services and that they are a disadvantage vis-à-vis their neighbours?

Brian Hayes (Dublin South West, Fine Gael)
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I thank the Senator for raising this important this matter and highlighting an issue that is of concern not only in her area but in my area because of the proliferation and number of housing units where a management company is already in place.

The introduction of a property tax is part of a broader approach to the taxation of property which aims to replace some of the revenue raised from transaction based taxes, which have proven to be an unstable source of Government revenue, with an annual recurring property tax, which international experience has shown to be a more stable source of funding. The local property tax was designed on the principles of equity, transparency and simplicity. Under the local property tax, a liability applies to all owners of residential property with a limited number of exemptions. Limiting the exemptions available allows the rate to be kept to a minimum for those liable persons who do not qualify for an exemption.

There is no specific relief from the local property tax for the payment of management fees, and there are no plans to introduce such a relief. Issues such as ability to pay are addressed through a system of deferrals, subject to meeting the qualifying conditions. Those who are liable for management fees to property management companies may be exempt or eligible for relief from the local property tax for another reason, or may be entitled to avail of a deferral arrangement under the provisions contained in the legislation.

Generally, properties in managed estates, to which such fees apply, would have been purchased by their owners in the knowledge that they would be taking on commitments to partake in and to fund the management of the estate, and that it was the intention that many such estates would not be taken in charge by local authorities, nor would it be appropriate for local authorities to do so. Management fees in these estates may, in some instances, include services such as refuse collection, maintenance of common areas and a sinking fund for certain repairs to the buildings. These are costs which homeowners in many other developments would have to fund themselves for their own properties.

In certain circumstances private estates will be taken in charge by local authorities in accordance with the relevant section of the Planning and Development Act 2000. This is a matter for the Minister for the Environment, Community and Local Government and the relevant local authorities. For those in unfinished estates, the Finance (Local Property Tax) Act 2012, as amended, provides that a residential property shall be exempt from the local property tax where it is situated in an unfinished housing estate that is specified in a list prescribed by the Minister for the Environment, Community and Local Government for the purposes of the Act.

The Minister for the Environment, Community and Local Government has prescribed and published this list, which is set out in the Schedule to the Finance (Local Property Tax) Regulations 2013 and was compiled by local authorities utilising the categorisation employed for the purposes of the national housing survey 2012.

For purposes of preparing the final list of developments to which the exemption from the local property tax would apply, local authorities were asked by the Department of the Environment, Community and Local Government to confirm or update the then existing list as appropriate. The local property tax is a self-assessment tax based on the market value of the property. In the first instance it will be a matter for the liable person to calculate the tax due. Liability to management fees and the scale of the fees due would be one of the factors that a property owner would take into account in valuing the property.

The introduction of the local property tax provides an opportunity for political reform at local government level. The local property tax will provide a stable funding base for local authorities and it can be altered into the future. This is a good reform in local democracy for the first time whereby funds will be ring-fenced for local authorities. We have not had that since the abolition of rates in 1977. Revenue from the local property tax will accrue to local authorities and will support the provision of local services.

Local authorities provide a broad range of services in the public realm the proper functioning of which are important for the wellbeing of every community and household. These include fire and emergency services, road maintenance and cleaning, street lighting, spatial and development planning etc. The net issue is that the local property tax applies to everybody no matter where one lives. Irrespective of the position in which some people find themselves in owning property in managed estates it is not envisaged that there would be a special category or a special exemption for them. That is not the position of the Government.

Deirdre Clune (Fine Gael)
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I had anticipated that type of response. The Minister of State said it was the intention that many such estates would not be taken in charge nor would it be appropriate for local authorities to do so. It is probable that the residents of the estates I have in mind did not know they would not be taken in charge. There is another category of estates where the process of taking in charge has not been addressed or is on the long finger. I know the Minister of State said it is a matter for the Minister for the Environment, Community and Local Government. This is an area that needs to be tidied up and a statement made in terms of progressing the issue.

Brian Hayes (Dublin South West, Fine Gael)
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Obviously, this is an issue for the Minister for the Environment, Community and Local Government. For people living in apartments and flats, their position is entirely different from that of those living in a housing estate where one can walk out the front door and on to a pavement and public access. In the boom times, local authorities used this as a cash cow by which to levy additional funds from those communities. Of course, those people obtain certain services by paying the maintenance fees. I think there are two different situations here and we need to look at this very closely. Ultimately, some new policy position has to be formed for people living in housing estates, as I do and I do not pay management fees. Why should one pay management fees in a housing estate that happened to be built at the wrong time? I do not think that applies to apartments because they are separate builds-----

Deirdre Clune (Fine Gael)
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Not apartments but generally-----

Brian Hayes (Dublin South West, Fine Gael)
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-----with common stairwells and sinking funds and so on.

Deirdre Clune (Fine Gael)
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I accept all that.

Brian Hayes (Dublin South West, Fine Gael)
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There are several arguments. If we could make some progress in this area it would be very useful.

Deirdre Clune (Fine Gael)
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I thank the Minister of State.