Catherine Murphy (Kildare North, Social Democrats)
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161. To ask the Minister for Finance the way in which local property tax is collected; if arrangements for collection are under review; the way these funds are dispersed nationally; the amount of LPT funds collected granted to each of the local authorities in each of the years 2015 to 2017, in tabular form; and if he will make a statement on the matter. [2762/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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In regard to the first part of the Deputy’s question, Revenue administers Local Property Tax (LPT) in accordance with the provisions of the Finance (Local Property Tax) Act 2012 (as amended). The Act specifies that LPT is a charge based on the market value of residential properties. The property valuation must be determined on a specific ‘valuation date’ and forms the basis for the LPT charge until the next ‘valuation date’. The first ‘valuation date’ for LPT was 1 May 2013 and the valuation of a property set on that date remains valid until 31 October 2019, following legislative amendments in the Finance (Local Property Tax) Amendment Act 2015. The 1 May 2013 valuation is not affected by any subsequent improvements or extensions to a residential property. Likewise, where a property is sold during the valuation period, and the value of the property has increased, there is no additional liability to LPT providing the initial 2013 valuation was accurate.

To assist with the calculation of LPT liability, valuations are divided into twenty (20) ‘valuation bands’ that incrementally increase by €50,000 per band. The only exceptions in this regard are Band 1 (€0 to €100,000) and Band 20 (greater than €1m). The LPT liability for Bands 1 to 19 is calculated at 0.18% of the mid-point in each band. For example, properties valued in Band 1 pay €90 per year (0.18% of €50,000). The LPT liability on properties valued in Band 20 is calculated at 0.18% up to €1m and 0.25% on the portion above €1m. With effect from 2015, Local Authorities can vary the LPT base rate (rate applied in 2014) by plus or minus 15% on residential properties located in their specific area. This variation is referred to as the 'Local Adjustment Factor'.

The person who is the liable owner of a residential property on the ‘liability date’ must make all statutory returns and payments in respect of that year. The ‘liability date’ in respect of 2013 was 1 May 2013 and for all subsequent years is 1 November in the preceding year. For example, the liability date in respect of 2018 is 1 November 2017. The statutory payment date for LPT is 1 January in the due year (i.e. 1 January 2018 for 2018). However to ease the payment burden Revenue introduced a wide range of options that facilitate payment in full on the due date, on a phased basis over the course of the year, or by annual debit authority on 21 March in the due year. The phased payment arrangements can operate through direct debits from current bank accounts, through salary deductions, or through deductions from certain Department of Employment Affairs and Social Protection and Department of Agriculture, Food and the Marine payments.

The LPT Act provides for a number of exemptions from the tax where certain qualifying criteria are met. Properties qualifying for some of the exemptions are not liable to LPT for the full ‘valuation period’ (currently 1 May 2013 to 31 October 2019) while others cease to be available once a change occurs in the status of the property and the qualifying conditions are no longer met.

The LPT Act also provides for a deferral or partial deferral (50%) of LPT where certain specified circumstances exist. These circumstances include ‘Income Level’, ‘Hardship’, ‘Personal Insolvency’ and ‘Personal Representative of a Deceased Person’. Once granted, a deferral normally remains in place for the duration of the ‘valuation period’ (currently 1 May 2013 to 31 October 2019). However a deferral is not an exemption and the outstanding liability remains as a charge on the property and must be paid before a sale or transfer can be completed. Interest is also charged on the deferred amount at a rate of 4% per annum.

In circumstances of non-compliance, Revenue has a number of sanctions available to secure payment. These include mandatory deduction from salary, occupational pension and certain Government payments; withholding of a refund of other tax as payment against LPT; surcharge on income tax, corporation tax or capital gains tax returns; refusal of a tax clearance certificate; application of interest at the rate of 8% per annum; referral to a sheriff or a solicitor for collection;  Attachment of a bank account or third party debt. Revenue always makes every effort to engage with the defaulting taxpayer in an attempt to agree a mutually acceptable payment arrangement before any debt collection sanctions are applied.

Revenue publishes detailed statistical information on LPT, including collection at Local Authority level, on its website at: www.revenue.ie/en/corporate/information-about-revenue/statistics/local-property-tax/index.aspx.

I recently announced that a review of the LPT will be advanced by my Department during 2018.  The review will look in particular at the impact on LPT liabilities of property price developments. It will also include an examination of the outstanding recommendations of the 2015 Thornhill review of the Local Property Tax (LPT). The review will be carried out by the Department of Finance in conjunction with the Revenue Commissioners and the Departments of Public Expenditure & Reform and Housing, Planning & Local Government. The review will include a consultation process to enable all interested parties and individuals to submit their views on the future of the LPT.

The purpose of the review will be to inform me in relation to any actions I may recommend to Government concerning the overall yield from LPT and its contribution to total tax revenue. The review will be informed by the desirability of achieving relative stability, both over the short and longer terms, in LPT payments of liable persons.

Distribution of LPT to local authorities is the responsibility of the Minister for Housing, Planning and Local Government. Local retention of LPT began in 2015 and is now established as an important source of funding for the local government sector, thereby reducing reliance on central funding. The Government decided that 80% of the estimated LPT liability in each local authority area for a given year is retained in that area to fund public services, notwithstanding any local variation decisions. The remaining 20% of LPT is re-distributed to provide equalisation funding to those local authorities that have lower property tax bases, due to the variance in property values and density across the State. This reflects the fact that local authorities vary significantly from one another in terms of size, population, public service demands, infrastructure and income sources.

In accordance with decisions taken by Government regarding the distribution of LPT, every local authority has a minimum level of funding available to it, known as the baseline.  There are variances across the country in terms of LPT levels but it is important that all local authorities receive at least this baseline level of funding to ensure they can deliver services. Equalisation is the process that ensures that every local authority’s LPT allocation is brought up to this baseline and there is a finite level of funding available for this purpose. Funding for equalisation purposes is provided via the Local Government Fund. The shortfall between the 20% contribution from all local authorities and the total amount required for equalisation is met by the Exchequer.

LPT allocations amounts and the distribution of equalisation funding are published on  Department of Housing Planning and Local Governments’ website at the following link: www.housing.gov.ie/search/archived/current/sub-type/funding-allocation/type/publications?query=local%20property%20tax%20allocations.