Michael McGrath (Cork South Central, Fianna Fail)
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84. To ask the Minister for Finance the cost that is included in the fiscal space for mortgage interest relief in each year to 2021; and if he will make a statement on the matter. [51349/17]

Michael McGrath (Cork South Central, Fianna Fail)
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85. To ask the Minister for Finance the revenue that is included in the fiscal space for local property tax; if that is based on LPT, in view of the fact that it currently is charged; and if he will make a statement on the matter. [51350/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 84 and 85 together.

The calculation of fiscal space decouples expenditure growth from revenue developments. Fiscal space represents the additional capacity arising from the permitted expenditure growth rate that is available for expenditure increases and/or tax reductions.  Fiscal space may be increased through the introduction of discretionary revenue measures that increase revenue and conversely it is reduced by discretionary revenue measures that lower revenue.  

As the Deputy is aware, the Government committed in the Programme for Partnership Government, the Confidence and Supply Agreement and Budget 2017 to retain Mortgage Interest Relief (MIR) beyond 2017 on a tapered basis.  Accordingly, Budget 2018 included its retention for principal private residences for a further three years on a tapered basis through the continuation of 75 per cent of the existing relief in 2018, 50 per cent in 2019 and 25 per cent in 2020.  

As the specific form and length of the tapering was only decided in the context of Budget 2018, pre-Budget 2018 tax forecasts include the costs of the scheme on an unchanged basis.   This means that the tapering of MIR results in a revenue yield to the Exchequer that represents a positive discretionary revenue measure.  It incrementally increases fiscal space by an estimated €51 million in 2018, €46 million in 2019, €41 million in 2020 and €37 million in 2021.        

With regard to Local Property Tax (LPT), the revaluation date has been postponed to 2019.  The position in 2019 and beyond is a matter for consideration by Government in the coming year.  In that context, my Department and the Department of Housing, Planning and Local Government in conjunction with the Revenue Commissioners will consider issues relating to the implementation of the recommendations in the Report prepared by Dr Don Thornhill.  The Government will make its position clear so that households will know well advance what its plans are for LPT. In that regard, the forecast for LPT as set out in Budget 2018 of €470 million for 2017 remains unchanged over the forecast horizon.    

As a result, there are no discretionary revenue measures relating to LPT in 2018 and no assumptions can be made in this regard for 2019 and subsequent years until the policy process described above is completed.  Accordingly, LPT has no impact on the forecasts of fiscal space out to 2021.