Eoghan Murphy (Dublin South East, Fine Gael)
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188. To ask the Minister for Finance the reason it was decided not to combine an annual income tax return with a property tax return. [3658/14]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that the introduction of the Local Property Tax (LPT) in 2013 was the largest extension of self-assessment in the history of the State, with over 1.3 million taxpayers obliged to file LPT Returns and pay the tax.  Given the significant numbers to whom the new tax applied, its introduction needed to be carefully planned and considered, particularly as respect the obligations on property owners to self-assess the value of their property, file the appropriate tax return and make their payment of tax.  This had to be achieved in the very challenging timeframe set for Revenue by the Government.

There are several reasons why a single tax return for both income tax and LPT was not considered practical when LPT was being introduced.  The Deputy will be aware that the Government decided in July 2012 that LPT was to commence in 2013 on a half-year basis.  The LPT 1 return filing date in 2013 of 7 May 2013 (or 28 May, for online filers) was specifically chosen because it allowed the various administrative arrangements for different aspects of LPT, including the range of payment options provided by Revenue, to be put in place before the 2013 LPT payment due date of 1 July 2013.  The Deputy will be aware that the Income Tax return filing date for those taxpayers who were required to file a 2012 income tax return was 31 October 2013 and if LPT declarations were included in this return, it would have made the introduction of a half-year LPT charge for 2013 impossible.

Another issue that makes the Deputy s suggestion impractical is that residential property owners who are obliged to file an LPT1 Return, are not necessarily obliged to file an Income Tax return. For example, the vast majority of PAYE customers, the unemployed, non-residents and those in receipt of the State pension are not obliged to file an annual return of income, where they have no other taxable income sources.  Moreover, the LPT legislation requires that only one LPT Return should be filed for a property so where there are multiple owners of a property, the designated liable person is responsible for filing the LPT Return and paying the tax.  In many instances of multiple properties, I am advised by Revenue based on analysis they have conducted on LPT Returns filed to date, the designated liable person is not obliged to file an Income Tax Return.   

The Revenue Commissioners have a strong track record in simplifying the administrative processes, as far as they possibly can, for all of the taxes and duties for which they have responsibility.  In the administration of LPT, Revenue has sought to make it as easy as possible for residential property owners to understand and comply with their LPT obligations.  This strategy has been very successful as evidenced by the compliance rate of 91% achieved for 2013.

I am satisfied that combining the LPT Return with the annual Income Tax Return would not have proved beneficial to the taxpayer or to Revenue.  In fact, it would have placed an unnecessary, additional compliance burden on some taxpayers, most likely increased the number of customer contacts for Revenue and potentially compromised the excellent voluntary compliance levels that have been achieved. 

Finally, as I have set out above, introducing a single return, even on a limited basis, to cater for Income Tax and LPT would require a significant restructuring of either the Income Tax or LPT provisions and I am do not believe that the impact of such changes would be justified for any potential benefits.