Billy Timmins (Wicklow, Independent)
Link to this: Individually | In context | Oireachtas source

159. To ask the Minister for Finance the position regarding the concerns of an organisation (details supplied) in County Wicklow that the property tax takes no account of ability to pay; and if he will make a statement on the matter. [39653/13]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As I have previously outlined to this House, in designing the Local Property Tax (LPT) the Inter-Departmental Expert Group chaired by Dr Don Thornhill (the “Thornhill Group”) had due regard to issues such as ability to pay and considered the provision of waivers or deferrals for households unable to pay the tax or where a payment requirement would cause hardship. In its approach to exemptions, the Group considered that the LPT should be centred on the principles of equity, transparency and simplicity. In terms of these principles, it was considered that a universal liability should apply to all owners of residential property with a limited number of exemptions. The Government accepted the recommendations of the Thornhill Group when considering the implementation of the LPT. Old age pensioners do not have a specific exemption related to age. They may qualify for one of the exemptions provided for in the legislation, or may be entitled to a deferral based on their income level.

The Government accepted the income thresholds recommended by the Thornhill Group for a full deferral, and adapted the income thresholds for a partial deferral so that they are €10,000 rather than €5,000 above the thresholds for a full deferral, thus allowing more persons the potential to avail of the deferral provisions.

To qualify for a deferral, the residential property must be occupied as a sole or main residence. The income thresholds for a full deferral will be €15,000 for a single person and €25,000 for a couple, whether married persons, civil partners or cohabitants. A person may claim a deferral if their income will not, “as can reasonably be foreseen at the liability date” exceed these thresholds in that year.

An increased income threshold applies in the case of properties occupied as a sole or main residence and subject to a mortgage. In such cases, the gross income thresholds may be increased by 80% of the mortgage interest payments. This deferral option will apply until the end of 2017 and will assist individuals currently in mortgage distress.

A deferral of up to 50% of the LPT liability will be possible where the gross income of the liable person does not exceed €25,000 for a single person or €35,000 for married persons/civil partners/cohabitants. A deferral of 50% of the LPT will also be available where gross income does not exceed the above thresholds (€25,000 single, €35,000 couple) as increased by 80% of the gross mortgage interest payments that a liable person expects to make by the end of the year for which the gross income is being estimated. This type of deferral will also be available until 31 December 2017.

Where a liable person no longer satisfies the necessary conditions, amounts deferred prior to the date on which eligibility ceased may continue to be deferred. Interest of c. 4% per annum will apply to any amounts deferred. The deferred amount, including interest, will attach to the property and will have to be paid before the property is sold or transferred.

To determine whether deferral applies for 2013, a person is required to estimate on 1 May 2013 what his or her total gross income for 2013 will be. Gross income from all sources consists of total income before any deductions, allowances or reliefs that may be taken off for income tax purposes and includes income that is exempt from income tax and income from the Department of Social Protection but excludes Child Benefit.

I appreciate some property owners may find themselves unable to pay LPT but do not qualify for a deferral under the existing legislation. For this reason, the legislation provides that a person who has entered an insolvency arrangement under the Personal Insolvency Act 2012 may apply for deferral of the LPT that is due during the period for which the insolvency arrangement is in effect. The legislation also provides that a person who suffers both an unexpected and unavoidable significant financial loss or expense, as a result of which he or she is unable to pay their LPT without causing financial hardship, may apply for full or partial deferral. Claims for this type of deferral will require full disclosure of the person's financial circumstances, supporting documentation and any other information required by Revenue and following an examination of the information provided, Revenue will determine whether deferral should be granted. The detail of how this type of deferral will operate and the criteria that will be used to determine eligibility are set out in guidelines published by the Revenue Commissioners.

Details of the deferral arrangements are available on Revenue's website www.revenue.ie, where the Commissioners have published a useful Guide to Local Property Tax.

Where a liable person does not qualify for, or does not wish to avail of, a deferral, phased payment of LPT can be used to assist with budgeting. I am informed by the Revenue Commissioners that taxpayers have a wide choice of payment options for the LPT from which they can choose the method most suited to their individual circumstances. There are currently eight options available, including the option to pay the tax through phased cash payments.

The cash payment option is available through three different approved payment service providers, which are An Post TaxPay, Payzone and Omnivend. The appointed service providers have extensive nationwide outlets and can process payment of LPT either in full as a single payment or by phased payments on a weekly or monthly basis as best suits individual needs. Payment via service providers is subject to transaction charges - these are at the discretion of the individual service providers and Revenue has no role in this regard. I understand An Post charges €1 per transaction; Payzone charges 75 cents per transaction for payments up to €50, €1 per transaction for payments between €50.01 and €100 and €2 per transaction for payments over €100; and Omnivend charges a fee of 4% per transaction.

Revenue provides two further facilities to make phased payments. Firstly, since 1 July 2013 payment of LPT can be made by way of deduction at source from employment, occupational pension income or from certain payments made by the Departments of Social Protection and Agriculture, Food and the Marine. This option does not incur any fees or charges and facilitates payment of LPT in even amounts across the year. Secondly, phased payments can be made by way of direct debit from the property owner's current account in a bank or other financial institution, including a credit union. Direct debit deductions commenced from 15 July 2013 and are deducted on the 15th day of each month. Normal direct debit fees charged by financial institutions apply to these payments.