Terence Flanagan (Dublin North East, Fine Gael)
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To ask the Minister for Finance if persons acting in the capacity of executors of wills will be included in the list of persons allowed to defer payment of the property tax, save where the executor of the will, or the spouse or partner are the sole or joint beneficiary of the property concerned; and if he will make a statement on the matter. [57511/12]

Michael Noonan (Limerick City, Fine Gael)
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Under section 11 of the Finance (Local Property Tax) Bill, the personal representative of the estate of a person who was a liable person for Local Property Tax will be the liable person in relation to a relevant residential property. The reason for making a personal representative a liable person is to prevent the avoidance of the payment of local property tax by means of unnecessarily delaying the distribution of the estate and the transfer of a property to the person who would become the liable person in respect of the property. This might happen, for example, where the person who inherits the property is already living in the property and there are no other beneficiaries involved. The tax will be part of the expenses of the estate, along with other regular expenses, including other taxes, where applicable.

However, I appreciate that it might not always be possible for the personal representatives to fund the payment of local property tax, whether the tax was owed by the deceased person or by the personal representatives in respect of the period following death. Addressing this difficulty is not straightforward given the variety of complex circumstances that can pertain to the administration of an estate. As I indicated on Committee Stage of the Finance (Local Property Tax) Bill in the Dáil on 18 December last, I intend re-visit the provisions regarding executors, in the context of Finance Bill

Pearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance if he will provide the underlying calculations in support of the estimated yield from the proposed property tax of €250 million in 2013, such workings to set out the assumed range of property values and associated volume of properties, non-compliance rates, deferral volume and value. [57387/12]

Michael Noonan (Limerick City, Fine Gael)
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In order to estimate a potential yield from a property tax based on value bands, an estimate of the share of properties that fall within each band is needed. As a data set of the values of all of Ireland’s property does not exist, a methodology for estimation must be formulated. In order to build conservatism into the yield forecast from the new local property tax, no single methodology was exclusively used for estimating a distribution of property values. Instead the yield was based on a blend of three approaches.

The first approach was based on the data used in the Thornhill Report updated to include regional variation in property prices. At the time of the Thornhill report a national register of prices of property transactions did not exist. As an alternative, the Central Statistics Office (CSO) provided the number of properties sold across a range of value bands of €50,000 increments for each of the years 2005 to 2009. The data was based on mortgage transactions and is an input into the CSO’s residential property price index (RPPI). Using the national change in values in the CSO RPPI from the year of the transaction to April 2012, a national distribution of property values in 2012 prices was constructed. This is the distribution published in the Thornhill Report (see Table 1 below). Regional variation was added to the Thornhill distribution using county level housing stock from census 2011 data (see Table 2), and regional variation in prices from the CSO RPPI. Three property price distributions were constructed; Dublin, national, and national excluding Dublin. This compares with one distribution in the Thornhill Report.

A weighted average property charge for each of the three regional distributions was constructed, weighted by the share of properties in each band. A county level yield was then calculated based on the number of properties in each county according to data from Census 2011 and the estimated weighted average charge. By summing over all counties a national yield was estimated. This approach results in a larger indicative yield than does the Thornhill approach due to a higher weighting of higher value properties in counties with larger volumes of properties (e.g. Dublin).

Counties were assigned one of the three constructed distributions. The four Dublin local authority areas were assumed to have a distribution in line with the Dublin price distribution, counties with large urban areas and counties adjacent to Dublin were assumed a have a price distribution in line with the national distribution and the remaining counties were assumed to be in line with the national distribution that excludes Dublin (see Table 3).

A weighted average property charge for each of the three regional distributions was constructed, weighted by the share of properties in each band. A county level yield was then calculated based on the number of properties in each county according to data from Census 2011 and the estimated weighted average charge. By summing over all counties a national yield was estimated. This approach results in a larger indicative yield to the Thornhill approach due to a higher weighting of higher value properties in counties with larger volumes of properties (e.g. Dublin).

The second approach used was similar but was based on data from the property price register. In autumn 2012, the Property Services Regulatory Authority published a national register of property prices (www.propertypriceregister.ie). The register includes the date of sale, price and address of all residential properties purchased in Ireland since 1 January 2010, as declared to the Revenue Commissioners for Stamp Duty purposes. The register is updated on an on-going basis. Data from the register were used to produce county level distributions as well as distributions in line with the three regional price indices published by the CSO, namely Dublin, national, and national excluding Dublin. These distributions are set out in Table 4.

The distribution from the register results in a higher incidence of higher value properties and a less peaked distribution to that in the Thornhill Report at values around €100,000 to €200,000 and an analysis based entirely on the register would result in a higher yield compared with the first approach described above. However, caution should be applied to solely relying on the register given the low number of transactions, the high percentage of non-mortgage (i.e. cash transactions) and the possible bias in recent transactions towards transactions of higher quality housing stock which may not represent the generality of housing valuations in the State.

The final method of estimation is based on the ESRI tax-benefit model SWITCH. In the SWITCH model, data on house prices come from the self-assessed value provided by the respondents to the Survey on Income and Living Conditions (SILC) in 2010 with these values indexed to adjust to 2012 prices. The SILC data are based on a sample of all private households, giving it the potential to provide a broader picture than one based on transactions or mortgages.

For each of the approaches described above an assumed deferral rate of 16% was applied. This is based on work by the Economic and Social Research Institute on behalf of the Thornhill Group.

Table 1: Thornhill Report and Property Price Register Distribution

Table 2: Number of households

Table 3: Thornhill Distribution with regional variation

Table 4: Property Price Register Distribution

Pearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance if he will provide an estimate of the cost of administering and collecting the proposed new property tax and household charge arrears in 2013; if he will provide an estimate of administering and collecting the household charge in 2012; and if he will indicate in the Budget 2013 documentation where account has been taken of any increased cost. [57388/12]

Michael Noonan (Limerick City, Fine Gael)
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The Revenue Commissioners will be resourced to ensure the successful implementation of the Local Property Tax. The additional resources required for 2013 are noted in the Department of Public Expenditure and Reform Expenditure Report 2013. The information requested by the Deputy is set out in Page 52 of the Expenditure Report 2013. The Estimate cost for implementation of Property Tax in 2013 is €25.9 million. In line with standard costs associated with administering and collecting taxes, it is expected that Administrative Budget provisions equivalent to 2% of the annual property tax yield will be required in 2014 and 2015, decreasing to 1% after 2015.

With regard to the Household Charge arrears for 2013, it is not possible to say at this stage what the estimated cost of administering this will be but it is not likely to be as high as the standard cost of 2% of the tax yield, given the likelihood of significant efficiencies being achieved in the collection of any such arrears when those arrears are effectively re-characterised as Local Property Tax from July 2013 onwards. The cost of administering and collecting the Household Charge in 2012 and arrears up to end June 2013 are a matter for the Local Government Management Agency (LGMA) and my colleague the Minister for Environment, Community and Local Government.