Finian McGrath (Dublin North Central, Independent)
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To ask the Minister for Finance the amount of property tax that will need to be paid for a house valued at €600,000 for a family on an invalidity pension of €1,100 per month. [56314/12]

Michael Noonan (Limerick City, Fine Gael)
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The 2013 half year property tax amount due on a property valued at €600,000 is €517. The full year property tax amount due on a property valued at €600,000 is €1,035. A property owner whose gross income (excluding child benefit) does not exceed €15,000 in the case of a single person and €25,000 in the case of couple, whether married, civil partners or qualified cohabitees would be entitled a full deferral of Local Property Tax. The deferral can be claimed, until the property is sold or transferred. A property owner whose sole income was €1,100 per month would come within this category.

Marginal relief will apply where the gross income is €10,000 above the income limits, to permit deferrals of up to 50 per cent of liability.

Terence Flanagan (Dublin North East, Fine Gael)
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To ask the Minister for Finance if any consideration was given to implementing a property tax on valuables sites that have not been developed; and if he will make a statement on the matter. [56334/12]

Michael Noonan (Limerick City, Fine Gael)
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The Inter-Departmental Group on the Design of a Local Property Tax, chaired by Dr Don Thornhill (the “Thornhill group”) considered the question of a site value tax or land value tax and reported in some detail on the matter. The brief was to design a tax on residences, and the Group was charged with the design of an equitable property tax to replace the household charge, a tax which was informed by previous work and international experience.

The Group considered the site value tax (‘SVT’) option and benchmarked it against a market value based system. It reported that international experience would come down heavily in favour of using the market values of residential properties and that SVTs are not used extensively internationally. The vast majority of the submissions made to the Group also favoured market value as a basis for the tax. Both residential market value and SVT meet a number of important policy criteria. The arguments for SVT are outweighed by the likely difficulties in ensuring acceptance by taxpayers, i.e., arriving at values that are evidence based, understandable and acceptable to the public in addition to complexities and uncertainties in the valuation effort necessary to put an SVT in place.

Under a market value approach applied to housing, the market value of a residential property is related to the characteristics of the building itself, the site on which it is located and the characteristics and amenities of the neighbourhood. There will be a relationship between the market value of a house and benefits to the owners in terms of enjoyment of the amenity value of the properties. The question – “what is the value of my or our house or apartment?” - is a relatively simple and well understood concept.

The Group reported that, in the case of SVT, property owners would have great difficulty in dealing with a valuation exercise which conceptually separates the buildings on the site from the site (for tax purposes) in circumstances where their predominant understanding and interest lies in the market (or resale) value of their residence. Similar challenges would arise for auctioneers and valuers. The SVT system would not be as transparent or meaningful to taxpayers as market value.

Both the 2009 and the 1982 – 1985 Commissions on Taxation recommended market value as a basis for the taxation of residential property. The 2009 Commission on Taxation also considered both the site value and market value approaches. They concluded that “while seeing the economic rationale for land value tax...” [that] “it may not be a pragmatic approach to the restructuring of our property tax system”. The Commission recommended in favour of market value of residential properties (housing unit and site) as the basis of assessment.