Written answers

Tuesday, 9 November 2021

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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115. To ask the Minister for Finance if he will consider abolishing the local property tax and replace the tax with a graduated second, third, fourth and so on home tax ensuring that the family home is not subject to a property tax in view of increasing inflation; and if he will make a statement on the matter. [54398/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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The Finance (Local Property Tax) (Amendment) Act 2021 fulfils the Programme for Government commitment to bring forward legislation in relation to the Local Property Tax (LPT) on the basis of fairness and that most homeowners will face no increase in their LPT liability. The Act provides for a cut in the main rate of the tax and widening of the valuation bands to make the changes affordable. This means that the majority of homeowners are likely to see either a decrease or no change in their LPT liability. Where increases arise, the majority will be a single band, notwithstanding the significant increases in property values since 2013.

The LPT legislation provides for the possibility of deferring the charge to LPT in certain circumstances to assist individuals who may have difficulty paying the tax. A qualifying person may opt to defer, or partially defer, payment of the tax. Where a person qualifies for a full deferral then 100 per cent of the liability can be deferred. Where a person qualifies for partial deferral, then 50 per cent of the liability can be deferred. The balance of 50 per cent of the tax must be paid. The deferred tax remains as a charge on the property and must be paid before a sale or transfer can be completed. Interest is charged on the deferred amount. The Finance (Local Property Tax) (Amendment) Act 2021 provides that for 2022 the deferral thresholds will increase to €18,000 for a single owner and €30,000 for a couple. The thresholds for 50 per cent relief are €30,000 (single) and €42,000 (couple). In addition, the rate of interest charged on deferred LPT liabilities will reduce from 4 per cent to 3 per cent annually.

Where a liable person does not qualify for or does not wish to avail of a deferral, phased payment of LPT can be used to assist with budgeting. The Government is aware of the difficulties facing many individuals and families, and for this reason a wide variety of methods for payment of the LPT is available from which liable persons can choose the method most suited to their individual circumstances. Throughout the pandemic, Revenue has engaged extensively with individual taxpayers experiencing financial pressures due to the pandemic to agree flexible arrangements that best suit their circumstances, including in respect of LPT liabilities and will continue to fully engage with taxpayers facing financial difficulties.

The LPT is an effective, stable and sustainable source of revenue for the Local Government Sector. All property owners benefit from the essential local services LPT helps to fund. Accordingly, it is equitable that the cost of providing the services should be shared by as broad a spectrum of owners as possible. It is unlikely that a charge levied solely on second and subsequent homes would generate sufficient income to replace the revenue from LPT. This funding gap would ultimately need to be met by the Exchequer in the form of increased general taxation. Landlords faced with the prospect of increased charges could, in turn, pass on the resulting costs to tenants. This would exacerbate the already difficult housing situation, particularly in large urban centres.

I have no plans along the lines suggested in the Deputy’s question.

Photo of Neale RichmondNeale Richmond (Dublin Rathdown, Fine Gael)
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117. To ask the Minister for Finance the measures taken in the Finance Bill to adjust tax bands; and if he will make a statement on the matter. [54310/21]

Photo of Jennifer Carroll MacNeillJennifer Carroll MacNeill (Dún Laoghaire, Fine Gael)
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121. To ask the Minister for Finance the changes that have been made to tax bands and tax credits; the expected benefit of same to persons; and if he will make a statement on the matter. [54342/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 117 and 121 together.

In Budget 2022 I announced a substantial income tax package and some changes to the Universal Social Charge (USC) that will ensure that every income-earner paying income tax or USC in 2022 will see an increase in their net income in 2022, all other factors being equal. This will support living standards as the economy continues to recover, while preserving a broad and stable income tax base, to ensure that our personal taxation system is both competitive and resilient.

From 1 January 2022, it is proposed that the main tax credits, that is, the personal tax credit, the employee tax credit and the earned income credit will be increased by €50 each to €1,700, broadly a 3% increase. In addition, it is proposed that the standard rate cut-off point for a single person will be increased by €1,500 to €36,800 (4% increase), with commensurate increases in the bands applying to married persons and civil partners.

In relation to the USC, to ensure that a full-time worker on the minimum wage, who will benefit from the increase in the hourly minimum wage rate from €10.20 to €10.50, will remain outside the top rates of USC, the ceiling of the band for the 2% rate of USC will be increasing from €20,687 to €21,295 with effect from 1 January 2022. In addition, the reduced rate of USC for medical card holders will be extended for a further year.

To answer the Deputy's specific question regarding the expected benefit of these changes, I would note that the precise amount by which an individual will benefit will be dependent on their personal situation, such as their earnings, marginal tax rate and the tax credits they are eligible to claim based on their individual circumstances. However the changes announced in the Budget will ensure that, all those income earners currently paying income tax and/or USC should expect to see a benefit.

The following tables set out the increases to the tax credits, tax bands and USC thresholds as announced in Budget 2022.

Further details can also be located on Revenue's website- www.revenue.ie/en/corporate/press-office/budget-information/2022/budget-summary-2022.pdf.

Tax Credits

Tax Credit 2021 € 2022 €
Single Person 1,650 1,700
Married or in a Civil Partnership 3,300 3,400
Employee Tax Credit 1,650 1,700
Earned Income Tax Credit 1,650 1,700
Widowed Person or Surviving Civil Partner (without qualifying child) 2,190 2,240

Tax Rates and Tax Bands

Personal Circumstances 2021 € 2022 €
Single or Widowed or Surviving Civil Partner (without a qualifying child) 35,300 @20%

Balance @40%
36,800 @20%

Balance @40%
Single or Widowed or Surviving Civil Partner (qualifying for single person child carer credit) 39,300 @20%

Balance @ 40%
40,800 @20%

Balance @ 40%
Married or in a Civil Partnership, one Spouse or Civil Partner with income 44,300 @ 20%

Balance at 40%
45,800 @ 20%

Balance @ 40%
Married or in a Civil Partnership, both Spouses or Civil Partners with income 44,300 @ 20%

With increase of 26,300 max.

Balance @ 40%
45,800 @ 20%

With increase of 27,800 max.

Balance @ 40%

USC Thresholds

2021 € Rate 2022 € Rate
Income up to 12,012 0.5% Income up to 12,012 0.5%
Income from 12,012.01 to 20,687 2.0% Income from 12,012 to 21,295 2.0%
Income from 20,687.01 to 70,044 4.5% Income from 21,295.01 to 70,044 4.5%
Income above 70,044 8.0% Income above 70,044 8.0%

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