John Browne (Wexford, Fianna Fail)
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171. To ask the Minister for Finance further to Parliamentary Question No. 175 of 4 February 2014, if he will provide an answer to the question raised, as his answer on that occasion does not address the issue raised; the reason the non-deductibility of local property tax from private rental income is being excused on the basis that it would reduce the tax base when it is an expense wholly and necessarily incurred in the business of letting private rental property; his views on whether a business cost is a business cost regardless of its impact elsewhere as otherwise it could be argued that anything that reduces exposure to taxation reduces the tax base, whether that be income tax, corporation tax, VAT refunds, personal reliefs and so on; and if he will make a statement on the matter. [6730/14]

Michael Noonan (Limerick City, Fine Gael)
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As indicated previously to the Deputy, the Inter-departmental group, chaired by Dr Don Thornhill, set up to consider the design of a property tax (the Thornhill Group) recommended that the Local Property Tax paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates.

The group recognised the considerable pressures on the public finances and the need to bridge the gap between expenditure and revenue, and, for this reason, suggested that consideration be given to phasing in deductibility over a period of years.  The group also considered that it was for Government, having regard to the prevailing budgetary situation, to decide on the time span for phasing-in deductibility and on what percentage of LPT to allow as a deduction from gross rents for tax purposes.

As I have indicated previously, the Government accepted the recommendation of the Thornhill Group in principle. However, the introduction of deductibility would in all likelihood on its own have negative revenue implications in net terms for the Exchequer. Regard has to be had to the implications for the overall budgetary situation of any decision in this regard and, as I have also previously stated, neither the manner nor the time frame for the introduction of deductibility has yet been considered.