Barry Cowen (Offaly, Fianna Fail)
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131. To ask the Minister for Finance if his Department or a body under its aegis has explored the prospect of applying local property tax to development sites with or without a building or structure zoned as suitable for residential development; his views on whether this could be a means of introducing a site value tax to reduce land hoarding and reduce speculative investment in development land; and the estimated revenue intake from such a tax. [32216/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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Following a commitment given in Budget 2015, a public consultation was conducted by my Department in 2015 on the issue of unused zoned and serviced land with a view to examining what taxation measures might be taken to penalise land owners who do not develop such land.

The Urban Regeneration and Housing Act 2015 (No 33 of 2015) gives Local Authorities new powers to incentivise the development of zoned and serviced land, as well as providing for other measures which are intended to facilitate housing development. The 2015 Act allows for the possibility of applying the vacant site levy to both brownfield (in-fill) and greenfield (new) development sites so long as they are located in designated areas in local authority development plans for the application of the levy. I understand that the Department of Housing, Planning, Community and Local Government proposes to encourage local authorities to apply the levy on as wide a basis as possible (brownfield and greenfield sites) in order to bring housing supply on stream earlier than would otherwise be the case.

On considering the outcome of the public consultation and the enactment of the Urban Regeneration and Housing Act 2015, it was determined that no new tax intended to encourage the development of residentially zoned and serviced land would be introduced.

In relation to a site valuation tax, the Deputy may wish to note that the 2012 report of the Inter-departmental Group on the Design of a Local Property Tax (the "Thornhill Group") comprehensively examined the basis of assessment for the Local Property Tax (LPT), including both the taxable value of the property option and a site value tax (SVT). The report favoured the use of market value of residential properties as the basis of assessment and this recommendation was accepted by the Government.

The Thornhill Group concluded that the arguments for SVT were outweighed by the likely difficulties in ensuring acceptance by taxpayers, i.e., arriving at values that were 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. In contrast, the Group considered that under a market value approach applied to housing, the market value of a residential property would be related to the characteristics of the building itself, the site on which it was located and the characteristics and amenities of the neighbourhood. There would 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.

At the request of the Minister for Finance, the operation of the LPT was reviewed in 2015 by Dr. Thornhill. A number of submissions to the review favoured changing the basis of determination of LPT liabilities to site value, floor area or variations thereof. Dr. Thornhill considered these but remained of the view that market value is the most appropriate and equitable basis on which to determine LPT liabilities.