Ken O'Flynn (Cork North-Central, Independent Ireland Party)
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300. To ask the Minister for Finance if his Department has considered the introduction of a site value tax or equivalent measures to discourage speculative landholding that withholds serviced land from development; and if he will publish any economic analysis on the potential effects of such a tax on housing affordability. [47953/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware, it is a longstanding practice for the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.

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.

The report of the Commission on Taxation and Welfare, published in 2022, recommended the introduction of an SVT on all land currently not subject to LPT. This would include land that is underdeveloped zoned residential land. It also includes commercial, mixed-use, agricultural and all land on which derelict and uninhabitable properties sit.

The Commission noted the potential benefits of an SVT, including how it could encourage the development of underutilised land and the activation of derelict properties. However, the logistical challenges of implementing such a tax was also acknowledged. The Report stated that data is not currently collected or published on a number of key inputs required to estimate site values, and that an SVT would require the collection of a number of data sources on land, property prices and other property characteristics in order to develop a comprehensive register of sites.

Without such data available, it is difficult to estimate the potential effects of an SVT on housing affordability.

My Department continues to monitor all aspects of the property market and I will continue to work with my colleagues in Government to ensure that any further interventions in the housing market are appropriately calibrated, represent the best use of scarce public resources, and assist with boosting the supply of much-needed housing in the State.