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Select Committee on Finance, Public Expenditure and Reform, and Taoiseach debate -
Thursday, 18 Nov 2021

Finance Bill 2021: Committee Stage (Resumed)

SECTION 77 (Resumed)

We are resuming on section 77 and I call on the Minister to move amendment No. 124. Amendments Nos. 124 to 128, inclusive, 130 to 144, inclusive, 147, 159, 152 to 158, inclusive, 160 and 161 are related and will be discussed together. I note the committee disposed of sections 78 to 83, inclusive last evening.

I move amendment No. 124:

In page 164, line 18, to delete “sections 175 and 177AE” and substitute “section 175 or 177AE, as the case may be,”

Section 77 of the Finance Bill 2021, as published, introduced Part 22A into the Taxes Consolidation Act 1997, which provides for a residential zoned land tax, RZLT. The zoned land tax contains the provisions which will apply to land zoned and serviced on and from 1 January 2022. This measure is designed to prompt residential development by owners of land that is zoned for residential or mixed use purposes and that is serviced.

I am proposing a number of amendments which can be split into three categories. Amendment 158 introduces section 653AM to deal with situations where nobody has come forward as the owner of a site that is within the scope of this tax. This measure provides that where the owner of such a site does not register with Revenue the site may become the property of the State. If an owner has registered with Revenue, Revenue will use its normal collection mechanisms to collect the tax and interest due. This provision only applies where no owner has been identified. It will only apply where the tax and interest owing and charged on the land exceeds 110% of the market value of the site. Once the amount of unpaid tax and interest exceeds 110% of the market value, the first step is that Revenue will place a notice in Iris Oifigiúil setting out that this process is commencing. After six months, if nobody has come forward and registered as the owner of the land, the Minister for Public Expenditure and Reform can make an application to the High Court to have the site concerned made property of the State. The High Court can then make such directions as it thinks are appropriate in relation to publication or otherwise before making the order sought. While it is envisaged that the Revenue Commissioners will rely on this measure only in limited circumstances, its inclusion is an important tool in targeting non-compliance in circumstances where the tax due on a site within the scope of residential zoned land tax is not paid and the landowner is not forthcoming in meeting its obligations.

Amendments Nos. 131 and 133 place two additional requirements on owners of a site where they are making a submission to the local authority on either a draft map or a supplemental map. These two additional requirements are, first, that the owner's submission includes a map from Ordinance Survey Ireland that clearly identifies the site and, second, the owner may be asked to provide evidence of ownership to the local authority. Both of these additional requirements are necessary to ensure that the appeals procedure, where a landowner can appeal a decision of the local authority, can operate as intended.

Amendments Nos. 160 and 161 seek to provide for reports in regard to the RZLT. On amendment No. 160, the Deputies may note that in setting the initial rate for this tax great care needs to be taken to get the balance right between it achieving its essential purpose of encouraging the release of land for home building purposes, but at the same time not being too penal that it runs the risk of being challenged in the courts. If I were to apply a rate of 25% from the outset, it would change significantly the economics of making a return on capital invested in the land as a business asset and this could make the business model unviable, which would be counterproductive and damaging to the goal of meeting our house building objectives over the next number of years. It is important to see how the tax operates and to then make an assessment as to whether it is working. If it is not leading to an increase in land being released for housing purposes, I will have no hesitation in reviewing the rate, if I deem it likely that this will help the situation. In summary, I believe the 3% rate is an appropriate rate to apply when this tax comes into force in two years' time, as I am of the view it will encourage landowners to either develop their land or sell it to others for development purposes. In doing this, the supply of land available will increase. This should be reflected in a stabilisation of land prices. It is for this purpose, I cannot agree to the amendment seeking this report.

On amendment No. 161 and the Deputies' wish that I produce a report estimating the likely financial impact of the exclusions, exemptions, deferrals and abatements from the residential zoned land tax contained in this section with a view to removing any or all of them before the tax comes into effect my views are as follows. In order for this tax to be effective it is necessary that there be exclusions, including, among other things, residential dwellings and their gardens, certain infrastructure or facilities including utilities, transport, and facilitates for social, community or recreational purposes, business premises in areas zoned for mixed use purposes. Without these exclusions, we would be taxing land on which there was no possibility of any housing development taking place. This would make no sense.

In regard to the issue of deferrals, the Deputies should note that these arise only in very specific circumstances such as, first, where a judicial review has been sought by a third party against the decision of a local authority or An Bord Pleanála in relation to a planning decision. In my view a deferral is fair in such a situation as the matter is out of the control of the developer. The second circumstance is in a situation where a person has commenced development of a site. Since the purpose of the tax is to encourage developers to build on this land, it seems appropriate in my view to suspend the payment of the tax, which continues to accrue, for the duration of the construction period. Should they meet their delivery commitments, then the tax will not be payable, but failure to do so will result in a proportional payment of the suspended tax for the part not completed. This approach is aligned with the philosophy behind this tax of encouraging the construction of houses rather than as a revenue raising measure. For that reason, I cannot agree to this amendment.

I apologise for interrupting the Minister but we are experiencing some feedback on the system and it is affecting the broadcast.

It may be that somebody's device is not on mute.

I think the interference is gone.

The remaining amendments are all technical in nature, correcting references and typos and making other minor errors where the legislation, as drafted, did not quite work from a technical perspective.

I will be introducing a number of Report Stage amendments which I think at this stage will mainly relate to maps and are likely to be technical in nature.

This section in the Finance Bill is larger than many Bills we deal with. Some of it is quite straightforward and other parts are a bit more complex. We will have another opportunity to look at it on Report Stage with the Minister's amendments and others. I know we are restricted to three interventions or something like that, but I ask the Vice Chairman to allow a bit of back and forth to deal with this point. I do not imagine it will take very long.

My first question is on the rate. I heard what the Minister said about keeping the rate under review if it was required. We know the problems with the vacant site levy and we argued with the Government that it should come under the fold of the Revenue. Notwithstanding that, my question is as follows. Under the vacant site levy at 7%, the owner of a piece of land that is currently valued at €1 million is currently required to pay €70,000 annually. Under the provisions of this section of the Bill, that will no longer be the case. How much will the owner now pay?

If it is worth €1 million, the owner will be paying €30,000.

That site is currently being charged €70,000 to try to encourage its development or sale for development purposes and yet there is a reduction here. That is the concern. The vacant site levy was raised from 3% to 7%. There are many more issues with the vacant site levy regarding collection, implementation, local authorities and all that. The rate was also raised because at 3% on a piece of land worth €1 million, the €30,000 that was being charged was not working and so it was increased to €70,000. Given the lead-in time for this tax, surely it should be considered at a higher rate. My view is that it is not penal to have it at a 7% rate because others, including some in Government parties, have called for the vacant site levy to be significantly increased. There is a very long lead-in period meaning that people who have vacant sites will know that this is coming down the line within a number of years, giving them the opportunity to act.

With that in mind, why does the Minister believe reducing the tax required to be paid on those sites will encourage the owners to develop them, given that they will be paying less than half of what they are currently paying?

It is because of the difference in scale of the tax. I will give the Deputy a sense of how broad we believe this tax will be in comparison with the current vacant site levy. Currently, the vacant site levy is applied to 501 ha across the country. My recollection is that it applies to several hundred properties. Our estimate is that the zoned land tax will cover approximately 8,000 ha to 9,000 ha. Therefore, it will be 16 to 18 times bigger than the current tax. Whereas the current vacant site levy is one with which very few landowners interface, the residential zoned land tax will become a core part of how land is taxed if homes are not being built on it. The reason is difference of scale.

I understand that.

We will go from a tax that very few landowners pay to a tax which, particularly when the maps come out in September or October of next year, many landowners will pay. I expect that several landowners will be surprised that they will be paying it. Given that and given the fundamental difference in scale, I believe 3% is the appropriate starting point.

I can understand some of the Minister's logic. As the net is far bigger, with a lower rate we might be able to move some of these sites on. However, it does not take away from the fact that by 2024, when this kicks in, the tax liability for sites where the owners currently pay the vacant site levy will reduce by more than half. That is problematic because at that point, rather than being an incentive, it will be a bit of a disincentive compared with the trajectory it had been on.

The Deputy is missing two parts in that analysis. First, as he knows because he has called this out, is the major challenge in collecting that tax in the first place. He knows that because it is implemented via local authorities and it is not collected on the scale and with the speed we would want. This tax will be collected by the Revenue Commissioners.

The other part of the argument is that this will go from a tax that a few people pay to one that many landowners will pay, and a difference in scale. Returning to the example the Deputy gave of a piece of land worth €1 million, there would be many pieces of land like that across the country. The tax is being paid at 3% per year and will be collected every year. That means by year three of the tax, 9% of the value of that land will be paid in tax.

I understand that and the cumulative effect of it. What data has the Department collected on land value inflation over the last period? What projections does it have over the next five to six years? This means nothing if land values are increasing by more than 3%. There is no incentive to do anything because people can just sit and ride it out if land values are increasing every year.

The value of the tax will also increase.

The value of the tax will increase but the over-value of the site that the owner disposes of at the end will increase. Has the Department done calculations based on land value inflation of, for example, 5%?

Landowners will only accrue the benefits of inflation when they dispose of the land and they will need to pay the tax each year.

That is the difference. I understand the Deputy's argument.

If the value of land increases and we take the portion of the increase every year, then the tax that is paid on that is 3%. The landowner will be able to maintain 97% of the portion of the land value increase each year. If the land value increases by more than 3%, there is a benefit for the landowner to do what is happening across the State, which is hoarding. That is the problem here. What is the rate of land value inflation in recent years and what are the Department's projections for it? That is fundamental to this tax.

I do not have figures with me for what land price inflation has been.

Does the Minister have any indication of where it will be?

Of course, I will be able to get it for the Deputy. I am sure the Department has it. I will have it on Report Stage and can share it with him beforehand.

Does the Minister accept if land value inflation were running hypothetically at 5% per annum, even with this tax there is an incentive for landowners to hoard land with the aim of cashing in some years later with a higher value on disposal?

No, I do not. That is where I differ from the Deputy. While I accept his point entirely that the disposal price of the land will increase, I believe the cash-flow impact of having to pay 3% on land that is increasing in value will be more significant than does the Deputy. He is correct that the capital value of the land will go up, but the cash-flow effect of having to pay 3% on land that is going up in value will be considerable over time.

That is fine. Will the Minister give a working example, from the Department, of land value inflation running at 5% to 10% on a percentage basis and what that will mean for the tax? That would be helpful for the debate.

Again, my contention is that the middle of a housing emergency is not the time to introduce a tax, which will not come in until 2024 at the earliest or 2025 for other sites, at the lowest level. This should have been done a long time ago. The vacant site levy has not worked to the desired effect. I will ask some other questions on this matter. Why will the levy not be in place until January 2024 at the earliest?

It is because of how much time it will take to assemble the land register and to allow the appeals process for the land, which I am advised is necessary in order to maintain the constitutionality of the tax. What that means, specifically, is it will take until sometime next year to put together the land maps that will show land that is subject to this tax, in other words, land that has zoning enabling homes to be built on it that are not being built, land that is either serviceable or serviced and that is not contaminated. We believe it would take a good part of the first half of next year for the local authorities to do that. I have been advised there needs to be an appeals process put in place after that to allow the status of that land to be queried and possibly challenged. That then requires a supplementary map to be produced, which will go into the following year, with the tax then being levied in May of the year after that.

Okay. The toing and froing in respect of the local authorities takes up a large section of the legislation. It again speaks to the fact that, in some cases at least, this tax will not come in for another four years. This is not the time to introduce it at a low rate. We will bring forward amendments regarding that.

I expect the land that may not be subject to this tax for up to four years - I will await a note from my officials regarding that - will be a small share of the total land.

It is for the newly zoned land-----

It will be the newly zoned land, so-----

It will be three years for all other lands.

Exactly. It will be three years for all other lands. I accept that for some land on which the tax will apply it will take longer, but that is because it will be subject to a new zoning decision.

In the middle of a housing crisis, even three years is a long time. Given-----

The Deputy is assuming that the effect of this will not be felt until three years' time.

I would assume-----

I take a different view. The effect will begin to become apparent once landowners realise they are due to pay this tax. I believe they will take action before the point of payment.

That is the key point. That is why we should introduce it at a higher rate. They will not have to pay it because they will take action, which is the desired effect the Minister and I want, but having a higher rate will ensure more people will take action.

We have just exchanged a view on the 3% rate and it is certain that, across a three-year period, we will have taxed nearly 10% of the value of that land.

That is fine. If landowners do not develop, and if there is residential land in our towns and cities that is undeveloped, then they should pay 10% over three years. They should probably be paying 10% in the first year. We are in the middle of an emergency. This is not the time to be thinking about the poor craturs who are hoarding land in the middle of our towns and cities. This is a time to say, "Use it or we penalise you because you have had enough time." We have been in the middle of a housing emergency for a while.

I am sure the Minister will respond to that but let me put my other questions in the interests of time. They are just technical questions. Chapter 2 concerns zoned serviced residential land and applies to land "solely or primarily for residential use, or "for a mixture of uses, including residential use". We will have a situation where active farm land, which has a mixed-use purpose, will also be zoned for residential use because part of the farm is close to the town centre. How does that work? Is it the case that farmers will have to apply for it to be dezoned and so on? Has there been consideration of the implications of how that will impact on agriculture? If farmers are going to go and get land dezoned to solely agricultural land, is there is a process in place for them? Are there any knock-on impacts on farmers being able to raise loans and so on and so forth in terms of land that will be devalued, even though they are using it for farming?

What happens to land subject to this tax, that is in scope and part of the final map, which is sold during the process, since the tax kicks in after a period? How will the reasonable test outlined under the proposed section 653B(b), which is that the land is serviced or has access to services, operate? My final question on this chapter is about Revenue's ability to engage. I do not have the section in front of me but I am sure the Minister's officials will know it. Revenue has the ability to point out to a local authority a site that was not included in earlier maps. The local authority then has to make that provision in its final map. That is fine if it is the middle of this process, which is that the local authority draws up a draft map, it goes to consultation and landowners are able to write in and make submissions or whatever. For the subsequent map, Revenue, in the middle of that process, can point out a site that was omitted and, therefore, the local authority has to include it in the final map. What if that omission is identified after the final map is published? If I am correct, local authorities have to publish their new maps every five years. Can those be captured within the five-year period?

I will deal with each question in turn. In the case of the agricultural use of land zoned for residential purposes, the options will be to pay the tax, build homes on the land or change its zoning status. One of the key reasons we need a run-in period for this is that a dezoning or rezoning process will be put in place by local authorities to allow, for example, a farmer actively farming land zoned for residential use to apply to change the zoning status of that land. It will then be open to the local authority as to whether to grant that decision.

Is that an executive decision or a reserve function of the local authority? Are all these decisions under this legislation taken by members of the local authorities or by their executives?

It is members of local authorities. This is one of the things that needs to be fully confirmed as to how it will work because the zoning process for land at present, as the Deputy well knows, takes some time to do. We will need to have a faster process for managing zoning appeals. To be very explicit about that point, because it was an important reminder from my colleague, a landowner will have the right to appeal the zoning status of the land.

It would then be open to the local authority to make a final view on that. I anticipate this will be a pretty active area over the next 12 to 18 months, which is another reason a run-in period is needed.

On the Deputy's question on what would happen if the land is sold, whoever owns that land would pay the tax each May. To use the Deputy's example, if the land is sold, the new owner would pay the tax the following May. It is an annual recurring charge.

Regarding the Deputy’s question on how we will deem if it is reasonable for land to be serviceable, that will depend on the local authority's evaluation of it taking account of the proximity of the land to infrastructure or how likely it is to be serviced in the near future. That is the reason these maps will be fundamental. We will rely on the local authority evaluation of that, in turn, for the Revenue Commissioners to levy the tax.

The Deputy asked about a scenario where land is omitted on a map but the Revenue Commissioners deem it should be subject to the tax. The maps would be reviewed each year once the tax becomes operational after the run-in period and then at each point in the year, the Revenue Commissioners would have the ability to recommend or note land that should be covered by the tax.

I have a final question on this entire subject. Will the Minister talk me through a working example of this? I am not referring to the process of doing the maps, as that is clear in the legislation. To take the example of my county of Donegal, there are well established towns but also small villages, which would have local area maps. Will all the sites in all those villages be captured? What is the definition of this? For example, would it be if there are footpaths, lights and infrastructure in those villages and all the undeveloped land in them? How would that marry with housing need in the area?

The number of exemptions from this tax are very narrow. In theory, if the land has a zoning status that means housing should be being built on it and it would be subject to the tax. We do not have a minimum threshold of an area of land to which the tax should not apply. If there is any area in any village, to which the Deputy has referred, which meets the criteria of being zoned for residential use, serviced or serviceable, and uncontaminated, there will be a liability to pay tax on it.

Regardless of the housing need in that area.

Yes, but I imagine that would be a matter the local authority would have to consider.

How could a local authority do that? I am thinking of villages in rural Ireland and within the control points, they are zoned for mixed use or residential purposes. There would not be a density of development in those villages. What would be exempt then would the curtilage of one's home. The Minister said he would not be taxing where a house could not be built. However, any other fields in those villages would come under the application of the tax.

This is where the issue of service capacity comes in. The local authority will have to form a view as to whether that land is capable of being serviced. That is the criterion it will have to consider.

Some of the land will be capable of that. Theoretically, if every single vacant site in a village were to be developed, there would not be the service capacity required for sewerage services or possibly water services, but there would be the capacity to develop further. This is new legislation and it is important to have that mapped out. The Minister mentioned the Department has done an assessment of the amount of land that would be captured. It would be helpful if that was provided to us. Do he have regional or county breakdowns of that? The county development plan has a list of all the towns. It is important landowners would know that X village would be subject to this measure. As we are having this discussion, there is an impression this measure will impact on Dublin, Cork and the higher density areas but it goes way further than that.

That is the reason we have a run-in period for it. The Deputy began his questioning by asking why can we not do this more quickly. The reason we must have a run-in period, which the Deputy considers is too long, is to give these kinds of indications to landowners. This will be a very broadly applicable tax and, in particular, time will be needed for the appeals process. The reason we need a run-in period is the point the Deputy has just identified. The scope and applicability of this land will be much broader than many people are currently aware of and to deal with the consequences of that, we will need time for an appeals process and a supplementary map. That is why the run-in period is the length of time I am recommending.

The run-in period is to provide for awareness of this. The reality is that if a town is zoned for housing, it would be rare if a piece of land in the centre of that town would be unzoned. Further questions arise on this issue. We must examine the issue of housing needs. The same tax will be applied to a person in a village in a rural community where there is a housing need as will be applied to those in certain areas where there is a major housing need. We know there is a housing need everywhere. That is reason this type of tax on developed land needs to be introduced. The fact that it will be applied to land in a village at the same level as to a vacant site in the centre of Dublin could be problematic.

We are in the middle of a housing emergency, as the Deputy well knows. A key learning from the local property tax is that if we are to enforce a measure nationally, that it is important it would have a clear rate with few exemptions, and that is what we are doing here. If we were to adopt a model of having a different tax for different parts of the country, that would undermine its effectiveness, pose a major challenge in implementing it and would give rise to a phenomenal number of anomalies that over time could run the risk of undermining the tax.

The Deputy's concluding questions are the reason we need the run-in period, of which he was earlier critical. We need to allow for an adequate appeals procedure for landowners who may not be satisfied to be subject to this tax. We need to allow them the time to act and to allow local authorities the time to deal with appeals submitted to them.

The concern I have is that maps will be concluded but the tax will not apply for a period after that. There must be a process to provide for the local authorities to become familiar with that. More awareness of this will be highlighted by this committee. Can the Department provide us with the list of towns and villages across the State to which this tax will apply?

It will apply to all towns and villages across the State. If a town or village has land within it that meets the three criteria I outlined, it will apply.

It must have a local area plan. Let me check the criteria. Not every town and village has a local area plan.

However, every town and village has a zoning status. It is delivered via local area plans in some areas and not in others. The requirement is whether it has a zoning status.

Yes. Every defined town and village under county development plans would fall under this measure regardless of whether they have a local area plan.

Many towns and villages do not have local area plans but they are all part of a county development plan and that county development plan confers a zoning status, which goes back to the criteria we discussed earlier.

If a town or village has land that has a zoning allowing residential use but that land is not used for residential use, and if it is serviced or serviceable, then it would almost certainly be subject to this tax.

Deputy Doherty requested more granular data regarding where the tax will apply. The Department of Housing, Local Government and Heritage has information on the zoning status of land and I will supply that to him before Report Stage.

I have two questions on which I want further detail. One of the exemptions noted in the explanatory memorandum is " which is zoned for residential use but is used to provide services consistent with a residential area, e.g. a corner shop". If the Minister knows Galway city, I am sure he will be aware that we are plagued with vacant sites and have been for a long time. Thankfully, we are now seeing movement on one of the biggest of those sites and that is good news. Will that particular exemption only apply to a fixed premises? There are mobile coffee vans popping up everywhere at the moment. I ask the Minister for some detail on that.

I do not think the presence of a mobile coffee van will exempt the land from that tax.

It would have to be fixed.

I have been told that it has to be an authorised presence on that land. For example, it would have to have a licence. To bring to life the Deputy's point, let us say that we have a piece of land that is zoned for residential use, and in that piece of land there is a small section that Revenue deems is being used in such a way that it is important to the operation of commercial life within that community. That small piece of land could then be exempt from the residential zone and the zoned land tax, ZLT, but if the local authority and the Revenue Commissioners deem that the rest of that land is not fundamental to that commercial use, that land will be subject to the tax.

Okay. I would like more detail on the exemption for recreational use. How will that be monitored?

The local authorities will look at the zoning status of the land and then they will look at the use of the land. In sporting clubs all over the country, the land is either zoned for recreational use or, in some cases, for residential use but might have a lease, which allows it to be used by GAA clubs, sports clubs or whatever. In those circumstances, land used in that way will be exempt from this tax.

It would be at the level of a local GAA club or soccer club rather than somebody saying people go for walks on their land. It would have to be firmer than that.

It would have to be an awful lot firmer than that, which is why local authorities are so fundamental to the operation of this tax through the maps they will supply.

The Minister mentioned the broad base for the local property tax. There were deferrals and so on for people on low incomes. The Government wants to target land hoarders with this tax but given the broad nature of it and the fact that every village and town will be included, it may apply to people with very low incomes who might have a site that was left to them. There is no doubt that they could dispose of that site but the tax might be liable before they could dispose of it, if it was left to them in a will, for example. Is there any deferral option in such cases or how would they enter it with Revenue? Do they just have to pay the tax-----

They have to pay the tax.

-----regardless of whether they can pay it?

Yes. That is why we went for a 3% rate. The problem would be a lot bigger and affect more people if we went with 7%.

The point of this tax is not to target the poor woman of rural Ireland who was left a house or a piece of land. This is about land hoarders who are hoarding land in areas of acute need. I am not going to have that argument with the Minister again.

Amendment agreed to.

I move amendment No. 125:

In page 164, line 23, to delete “37P, 43, 172(2) or 174” and substitute “37I, 43, 172(2), 174, 177N or 177AD”.

Amendment agreed to.

I move amendment No. 126:

In page 164, line 31, to delete “37G, 37N, 42, 42B,” and substitute “37, 37G, 170,”.

Amendment agreed to.

I move amendment No. 127:

In page 164, line 35, after “2000” to insert “(or that section as modified in accordance with section 42B of the Act of 2000)”.

Amendment agreed to.

I move amendment No. 128:

In page 165, line 6, to delete “in a return”.

Amendment agreed to.

Amendment No. 129 in the name of Deputy Ged Nash has been ruled out of order due to a potential charge on the people.

Amendment No. 129 not moved.

I move amendment No. 130:

In page 166, line 11, to delete “paragraph (a)(i)” and substitute “paragraph (a)(ii)”.

Amendment agreed to.

I move amendment No. 131:

In page 168, between lines 6 and 7, to insert the following:

“(3) Where a submission under subsection (1) is made by the owner of a site, the submission shall be accompanied by a map prepared by Ordnance Survey Ireland at a scale at which the site can be accurately identified.

(4) Where a submission under subsection (1) is made by the owner of the site, that person shall have available such evidence as is necessary to prove their ownership of the site, and in determining whether section 653E applies to a submission, the local authority may request that such evidence is provided to the local authority.”.

Amendment agreed to.

I move amendment No. 132:

In page 168, lines 26 and 27, to delete “of receipt of the submission concerned” and substitute “from the date referred to in 653D(1)”.

Amendment agreed to.

I move amendment No. 133:

In page 170, between lines 22 and 23, to insert the following:

“(3) Where a submission under subsection (1) is made by the owner of a site, the submission shall be accompanied by a map prepared by Ordnance Survey Ireland at a scale at which the site can be accurately identified.

(4) Where a submission under subsection (1) is made by the owner of the site, that person shall have available such evidence as is necessary to prove their ownership of the site, and in determining whether section 653H applies to a submission, the local authority may request that such evidence is provided to the local authority.”.

Amendment agreed to.

I move amendment No. 134:

In page 171, line 11, to delete “draft” and substitute “supplemental”.

Amendment agreed to.

I move amendment No. 135:

In page 171, line 21, after “person” to insert “, who is the owner of such lands,”.

Amendment agreed to.

I move amendment No. 136:

In page 172, lines 20 and 21, to delete “the local authority” and substitute “An Bord Pleanála”.

Amendment agreed to.

I move amendment No. 137:

In page 173, between lines 2 and 3, to insert the following:

“(a) taking into account the inclusion of sites in the supplemental map prepared by it,”.

Amendment agreed to.

I move amendment No. 138:

In page 173, line 3, to delete “(a)” and substitute “(b)”.

Amendment agreed to.

I move amendment No. 139:

In page 173, line 5, to delete “(b)” and substitute “(c)”.

Amendment agreed to.

I move amendment No. 140:

In page 173, line 9, to delete “(c)” and substitute “(d)”.

Amendment agreed to.

I move amendment No. 141:

In page 174, line 6, after “in” to insert “subsections (2) and (3) of”

Amendment agreed to.

I move amendment No. 142:

In page 174, line 14, to delete “section 653C(4)(d)(i)” and substitute “section 653C(4)(e)(i)”.

Amendment agreed to.

I move amendment No. 143:

In page 174, line 17, to delete “section 653C(4)(d)(ii)” and substitute “section 653C(4)(e)(ii)”.

Amendment agreed to.

I move amendment No. 144:

In page 174, line 20, to delete “section 653C(4)(e)” and substitute “section 653C(4)(f)”.

Amendment agreed to.

Amendments Nos. 145 and 146 are out of order due to a potential charge on the people.

Amendments Nos. 145 and 146 not moved.

I move amendment No. 147:

In page 176, line 4, to delete “section 653” and substitute “section 653V”.

Amendment agreed to.

Amendment No. 148 in the name of Deputy Tóibín is out of order on the basis of a potential charge on the people.

Amendment No. 148 not moved.

I move amendment No. 149:

In page 177, line 2, after “shall” to insert “, where there is a liable person in respect of the relevant site,”.

Amendment agreed to.

Amendment No. 150 is out of order on the basis of a potential charge on the people.

Amendment No. 150 not moved.

Amendment No. 151 in the names of Deputies Boyd Barrett, Barry, Gino Kenny, Paul Murphy and Bríd Smith is out of order on the basis of being a potential charge on the people.

Amendment No. 151 not moved.

I move amendment No. 152:

In page 178, line 8, to delete “Cmmissioners” and substitute “Commissioners”.

Amendment agreed to.

I move amendment No. 153:

In page 178, line 20, to delete “size” and substitute “area”.

Amendment agreed to.

I move amendment No. 154:

In page 178, line 30, to delete “paragraph” and substitute “paragraphs”.

Amendment agreed to.

I move amendment No. 155:

In page 183, line 21, to delete “subparagraph” and substitute “subparagaphs”.

Amendment agreed to.

I move amendment No. 156:

In page 184, to delete lines 10 to 26 and substitute the following:

“(2) The Revenue Commissioners may authorise in writing any of their officers to exercise any powers to perform any acts or discharge any functions conferred by this section.

(3) In this section, ‘authorised officer’ means an officer of the Revenue Commissioners authorised under subsection (2).

(4) Notwithstanding any obligation as to secrecy or other restriction on the disclosure of information imposed by, or under, the Tax Acts or any other statute or otherwise, but subject to subsection (5), an authorised officer may disclose to an expert any detail in a liable person’s return under this Part which they consider necessary for the purposes of such consultation.

(5) Before disclosing information to an expert under subsection (4), an authorised officer shall give the liable person in relation to the relevant site concerned a notice in writing of—

(a) the officer’s intention to disclose information to an expert,

(b) the information that the officer intends to disclose, and

(c) the identity of the expert with whom the officer intends to consult.”.

Amendment agreed to.

I move amendment No. 157:

In page 191, to delete lines 28 to 33 and substitute the following:

“(6) Where there is no substantial activity in relation to that part of a relevant site to which this section applies which is being developed for a purpose other than residential development within a reasonable period of time from the date of the commencement notice, or the first commencement notice in respect of which works comprising substantial activity commence within the timeframe specified in the notice, as the case may be, referred to in subsection (2) that is lodged with the local authority, that part of the site which is being developed for a purpose other than residential development shall not, subject to this Part, cease to be treated as a relevant site until such time as works comprising substantial activity on that part of the site are commenced.”.

Amendment agreed to.

I move amendment No. 158:

In page 199, to delete line 21 and substitute the following:

“ “tax, corporation tax and capital gains tax.

Where no owner registered

653AM. (1) This section shall apply to a relevant site where no person has registered as the owner in respect of the site under section 653S and an amount of residential zoned land tax and interest has been charged on the land to which the tax relates under section 653Q(4).

(2) Where—

(a) this section applies to a relevant site, and

(b) the amount of residential zoned land tax and interest charged on the land under section 653Q(4) exceeds an amount, calculated as 110 per cent of the market value of the relevant site on a valuation date,

the Revenue Commissioners may publish a notice in Iris Oifigiúil in accordance with subsection (3).

(3) The notice referred to in subsection (2) shall state—

(a) that the issue of the notice is the first step in a process that may result in the relevant site concerned becoming the property of the State,

(b) the address of the relevant site,

(c) the unique identifier, or identifiers, allocated to the relevant site under the Registration of Title Act 1964, if available,

(d) the name of the local authority in whose functional area the relevant site is situated, and

(e) that the Minister for Public Expenditure and Reform may, after 6 months has elapsed from the date of the publication of the notice, apply to the High Court for an order that the relevant site is the property of the State.

(4) Where the Revenue Commissioners have published a notice in relation to a relevant site in accordance with subsection (3), the Minister for Public Expenditure and Reform may make an application referred to in subsection (5).

(5) An application referred to in this subsection is an application by the Minister for Public Expenditure and Reform to the High Court for an order that the relevant site is the property of the State.

(6) An application to the High Court under subsection (4) shall in the first instance be made ex parte and the High Court shall thereupon give such directions as it thinks proper in regard to service or publication of notice of such application and shall not finally determine such application unless or until the directions so given have been complied with and such time as the Court shall consider reasonable in the circumstances has elapsed since such compliance.

(7) Where it is shown to the satisfaction of the High Court on application to it under subsection (4) that, in respect of a site—

(a) the site is a relevant site,

(b) no person has registered as the owner in respect of the relevant site under section 653S, and

(c) the amount of residential zoned land tax and interest charged on the relevant site under section 653Q(4) exceeds an amount, calculated as 110 per cent of the market value of the relevant site on valuation date,

the Court may order that the relevant site is the property of the State from the date of the order.

(8) An order made by the High Court on an application under this section that a relevant site is the property of the State in accordance with this section shall (subject to appeal to the Court of Appeal) be conclusive evidence binding on all persons whatsoever (whether they had or had not notice of such application) that the said site is the property of the State from the date of the order.

(9) Where any relevant site becomes the property of the State in accordance with this section, such land shall, upon so becoming the property of the State, vest in the Minister for Public Expenditure and Reform.

(10) The Registrar of Titles shall cause the Minister for Public Expenditure and Reform to be registered as the owner of the land under the Registration of Title Act 1964.”,”.

Amendment agreed to.

Amendment No. 159 is out of order on the basis of not being relevant to the provisions of the Bill.

Amendment No. 159 not moved.
Section 77, as amended, agreed to.

I move amendment No. 164:

In page 212, after line 29, to insert the following:

“Report on the introduction of a vacant property tax

84. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on the introduction of a vacant property tax, the prevalence of vacant residential properties across the State, and options for the design, rates and operations for such a tax to encourage the use of vacant properties for residential dwelling.”.

This amendment was already discussed with amendment No. 162 and the question is-----

It has not been discussed with amendment No. 162.

Has it not? However, it has been grouped.

Yes, but we did not discuss amendment No. 162.

I do not want Deputy Doherty to take me for a stroll. I know he is a very nice guy.

Same to the Vice Chairman.

However, I have been led astray before. I will agree, with Deputy Doherty's agreement, to a passing reference to the amendment, on the basis it was understood it was being discussed and we spent almost on an hour doing so.

What does Deputy Doherty mean, "no"?

This is amendment No. 164, which the Vice Chairman has said was discussed with amendment No. 162. Is that correct?

That is correct.

The vacant property tax was not discussed yesterday. I will clarify.

I know what the Deputy is saying.

The grouping fell, because the individual was not here-----

I know what the Deputy is saying. It fell to be and should have been discussed yesterday, but was not and will now be discussed in order to be fair to everybody. However, I ask Deputy Doherty not to take me for a little walk.

The Vice Chairman is right on all of those points. We are looking for a report on the vacant property tax. The Government's Housing for All plan kicks the can down the road for another year on vacant property tax. At the Joint Committee on Housing, Local Government and Heritage in September, Department of Finance officials cited analysis by GeoDirectory which showed that in quarter 2 of 2021, there was 92,000 vacant properties. Some 4.5% of homes lay vacant in June of this year. Research shows we have the tenth highest vacancy rate in the world, which is a national scandal. Dereliction and allowing properties to lie empty is an act of vandalism against the public good. It can be seen in this city where apartments lie empty and in other areas where there is significant pressure in terms of housing need.

We were calling for a vacant property tax in 2016, as another lever that could be introduced to end the scourge of dereliction. It has not been brought forward by the Government. In 2017, my colleague, Deputy Ó Broin, argued for it in the context of that year's budget. That was four years ago. The Housing for All plan was published in September 2021, without any firm commitment to introducing a vacant property tax to penalise those who would allow residential properties to remain idle and unused. It has committed to a data collection exercise.

The Minister and the committee will be familiar with my raising the issue of the need for a local property tax on Committee Stage of the Finance Bill in 2018. In response, the Minister cited the Indecon report from September 2018 arguing against its introduction. Can the Minister now confirm he rejects the conclusions of that report? Can he now confirm he does support the introduction of a vacant property tax? Can he explain to the committee why he has not decided to introduce a vacant property tax in each of the past five years in which we have been calling for him to commit to one? I ask the Minister to expedite the introduction of the vacant property tax without delay.

Amendments Nos. 162 and 164 would require the Minister for Finance to lay a report before the Dáil on the introduction of a vacant residential property tax. Amendment No. 162 would require that such a report be laid before the Houses within one month of the enactment of the Finance Bill, while Deputy Doherty seeks a report within six months of the passing of the Bill.

I have stated that the primary objective of any vacant residential property tax would be to increase the supply of homes for rent or purchase to meet demand. However, before introducing such a tax, it is vital to have a sound understanding of the quantity, locations and characteristics of long-term vacant properties and the reasons they are vacant. This is the reason the housing for all strategy includes an action for my Department to collect data on vacancy with a view to introducing a vacant property tax.

The Finance (Local Property Tax) (Amendment) Act 2021 has accordingly enabled Revenue to collect certain information on vacant properties in the local property tax, LPT, return forms submitted by residential property owners in respect of the new LPT valuation period 2022-25. The extended deadline for submission of returns was Wednesday 10 November. The information on vacancy in the LPT returns, in respect of approximately 2 million properties, is currently being analysed by Revenue and together with information from other available sources, will be used to assess the merits and inform the design of a vacant property tax.

It is important to identify the reasons for vacancy and whether this is long or short term in nature. There may be genuine and acceptable reasons for vacancy such as refurbishment work, the temporary absence of the owner for medical reasons or pending the grant of probate for a deceased person’s estate. Appropriate exemptions from any charge would have to be considered in addition to acceptable periods of vacancy.

I want to make it clear that it is my intention to introduce a vacant property tax. However, the matter needs further consideration and the information Revenue will be collecting will be an input into what we will do, because we will need to come up with a tax which plays a role in encouraging and changing the use of vacant properties. Once the information from the returns has been collated and drawing on other available information, we will be in a better position to design a vacant property tax and assess its merits and precise design. As part of Housing for All, I will be treating this matter with the seriousness it deserves and will be looking at the introduction of a vacant residential property tax as early as possible.

When I put this forward in 2018, the Minister rejected the idea of a vacant property tax and he cited the Indecon report which recommended against a vacant property tax. Does he now believe he was wrong in that?

At that point in time, I would not have had the data or information I will have shortly, that will allow us to design a vacant property tax which will be of help in addressing the housing needs we have.

However, the Minister could have gotten that data that year. That is a cop out. The Minister does not have the data now, but he is saying he will bring in a vacant property tax. He could have gotten the data that year and argued against a vacant property tax in 2018. Can he just admit it was the wrong decision at that time?

In fairness, the Minister has changed his mind and that is a good thing. However, we have lost valuable years on vacant properties throughout the State.

At that point we did not have a revaluation under way for local property tax that in turn would provide information and data that will help with the decision I have made. I accept that as part of Housing for All, a tax that can apply to vacant properties can be part of how we respond to the housing needs we have.

Does the Minister have any regrets that he did not introduce a vacant property tax earlier, despite the fact that there are 92,000 vacant properties in the State? Many of those are in areas of high need.

I dispute that vacant properties are as prevalent as the Deputy believes they are.

The Department of Finance provided those Geodirectory figures of 92,000. I am not putting my own figures out. I am saying that many of those properties are in areas of high need; I am not saying all of them are or that all of them can be used. The reality is that of those 92,000 vacant properties, many of them are in areas of high need and they could be brought into occupancy.

I look at the figures we have on the low levels of vacancy from the Geodirectory survey as recently as last summer that indicated that in the north inner city of Dublin, for example, there was a vacancy rate of 0.86% and that the rate in Clontarf, for example, was 0.24%. Those figures would indicate that there is a low level of vacancy but behind every percentage point or fraction thereof is a vacant property that has the potential to be turned into a home. As part of Housing for All I accept that a vacant property tax will be able to play a role.

Does the Minister have any regrets?

As I look back at all the things that have happened in recent years, I believe that if I had introduced a vacant property tax at that point in time I could have done so with a design that might have been wrong which would have generated issues that I would then have had to deal with. The point at which to introduce this tax is after a local property tax revaluation that will provide information that will be of help in dealing with this.

I do not have any indication from the Minister when there will be a vacant property tax. There is data collection ongoing. Revenue could have been asked at any point in time to collect that data and a revaluation of the local property tax was not needed to do that. The Minister has not provided a commitment of when he will introduce this. The housing crisis has gotten out of control and the Minister has been forced to do a U-turn on a position which he defended against, despite Sinn Féin calling for it for since 2016. On that basis I will push this amendment to a vote.

Amendment put:
The Committee divided: Tá, 2; Níl, 5.

  • Doherty, Pearse.
  • Farrell, Mairéad.


  • Calleary, Dara.
  • Donohoe, Paschal.
  • Duffy, Francis Noel.
  • Durkan, Bernard J.
  • Richmond, Neale.
Amendment declared lost.
Amendment No. 165 not moved.
Schedule agreed to.
Title agreed to.
Bill reported with amendments.

The Minister has already indicated that he proposes to introduce some other measures on Report Stage.

I have proposed that and I have indicated what all those measures will be. I want to thank Deputies for the time and effort that has been expended over the last three days to scrutinise this Bill. I thank the officials of the committee and my officials for supporting us in our efforts. I want to acknowledge one official in particular, Rory O'Kelly. Rory is the engine of getting the Finance Bill arranged, implemented and done every year. He is the member of our team who is frequently seen with multiple binders and a large case that contains all of those binders. Rory has supported many Ministers in passing over 20 Finance Bills and he is getting ready to move on to new pastures. Before he does that I want to thank him for his tireless service and huge work at busy moments in the legislative year. I thank Rory for all his effort in supporting many Ministers and this committee in its work since 2006. I wish him good health and every success in the next phase of his life. I wanted to recognise that.

Members applauded.

There are not many rounds of applause in this committee so Rory should savour that moment. I look forward to working with Deputies on this important Bill on Report Stage.

As we come to the end of Committee Stage of the Finance Bill, I want to thank all the officials who engaged with us in the briefing, when we went offline at the committee and in the preparation of any notes. They have always been cordial to us as an Opposition party over the years. I want to add to what the Minister has said about Rory. Twenty years is a long time and there have been a lot of ups and downs and twists and turns in Finance Bills during those years. I want to be associated with the Minister's words and to wish Rory well for the future, whatever that may bring to him.

The Minister mentioned a number of the amendments that will be brought forward on Report Stage, including the amendment on agriculture. It would be helpful if a note were to be provided to us on that beforehand. The decision taken by the committee not to introduce a guillotine or time motion was the right call. We worked and co-operated well within the timeframe and I appreciate that.

I thank the Minister and his staff for making themselves available. I thank Deputies for patiently going through the procedure that has to be gone through. It is long and difficult but it has to be done. I thank each and all of them for their courtesy to the various Chairpersons at all times as we have rotated.