Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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536. To ask the Minister for Finance the progress made on strengthening the enforcement of the vacant site levy; if he has considered or is considering the introduction of a site value tax; and if he will make a statement on the matter. [20718/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The vacant site levy falls within the area of responsibility of the Minister for Housing, Local Government and Heritage and is not a matter for the Minister for Finance.

In relation to a site value tax, the 2012 report of the Inter-departmental Group on the Design of a Local Property Tax 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 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. Don 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. The 2019 Inter-departmental review of the LPT noted that a review of international practice suggests that market value is more commonly applied as a basis than site value. The 2019 Review Group accepted the rationale outlined in earlier reports and concluded that market value remained the best option as it was aligned with the guiding principles of transparency and equity.

Both Commissions on Taxation in 1985 and 2009 favoured property taxation based on market value citing inter alia significant difficulties in communicating to home-owners and land-holders the nature of the taxation charge that is involved and the benefits that would accrue from that change.

More recently the Government has approved the terms of reference of the new Commission on Taxation and Welfare which were published earlier this week, and include inter alia, consideration of "the appropriate role for the taxation and welfare system, to include an examination of the merits of a Site Value Tax, in achieving housing policy objectives. This consideration should include reviewing the sustainability of such a role. It should also have regard to the experience of previous interventions in the housing and construction market and the current significant State supports for housing provision ."

I look forward to seeing the outcome of the Commission’s deliberations in this area.