Billy Timmins
Question:42. Deputy Billy Timmins asked the Minister for Finance his views on correspondence (details supplied) regarding property tax; and if he will make a statement on the matter. [21939/13]
View answerThursday, 9 May 2013
Questions (42)
Written answers
The Government agreed with the recommendation of the “Thornhill Group” – the expert group that advised on the design of the Local Property Tax (LPT) – that the tax should be centred on the principles of equity, transparency and simplicity. It was also considered that a universal liability should apply to all owners of residential property with a limited number of exemptions. In making its recommendations for exemptions and for deferrals, the group had regard to the following criteria:
- Ability to pay;
- Reliefs create costs which have to be paid for, either by taxpayers who do not benefit from the relief or by reductions in public expenditure;
- Reliefs should be designed to address clear economic and social policy needs;
- Care needs to be taken in designing relief to ensure they are targeted based on need, and there are not unintended and inequitably distributed gains;
- The LPT is intended to be a tax on the benefit from ownership of a residential property;
- Such residential properties have monetary and non-monetary values which are independent of incomes;
- And that the LPT is not assessed on incomes.
While there are few exemptions from the charge to LPT, an exemption is available where a residential property was previously occupied by a person as his or her sole or main residence and has been vacated by the person for 12 months or more due to long term mental or physical infirmity and is not occupied by any other person. The system of deferrals outlined in the Finance (Local Property Tax) Act 2012, as amended, is targeted at cases of need, and has reference to income stressed home owners, allowing enhanced deferrals where there is low income and liability to mortgage interest. A liability for LPT will arise where a person owns a residential property on the liability date, which is 1 May 2013 for the year 2013. The LPT is a self-assessed tax and therefore liable persons are obliged to calculate the tax due based on their assessment of the market value of their property, file their return by the relevant deadline and pay the tax due. The tax is in place for a half year in 2013 and for a full year from 2014 onwards.
Revenue has put in place a wide range of payment options to enable liable persons to select the one that best suits their circumstances, to will allow them to pay their LPT liability in full, or to pay by instalments in various ways, including by deduction at source from certain Department of Social Protection payments. This is intended to assist with budgeting by allowing liable persons to pay the tax in equal instalments.
For liable persons who choose not to make an LPT Return, the Revenue Commissioners have a duty, in the interests of fairness and equity to those who are compliant, to take effective follow-up action to recover the tax from the non-compliant. This may mean that tax clearance certificates will not be issued where there is failure to pay LPT. I believe the vast majority of people will want to be compliant with the LPT, as they are with other taxes legislated for by the Oireachtas. Revenue is making it as easy as possible for people to comply with their obligations to submit an LPT return and either make arrangements to pay their LPT charge or avail of a deferral of the charge if they are eligible.
For individuals on low incomes or whose only income is from the Department of Social Protection, the LPT legislation provides for the possibility to defer the charge to LPT in certain cases where specified conditions are met. The deferral system focuses on ability to pay the tax and is based on the income of the liable person, with increased limits where there is liability to mortgage interest. A person who qualifies for full deferral can opt to defer 100% of the LPT liability. A person who qualifies for partial deferral can opt to defer 50% of the liability and must pay the balance of LPT. In all deferral cases interest will be charged on LPT amounts deferred at a rate of just under 4% simple interest per annum. This is half the rate of interest that applies in cases of non-compliance with LPT and other taxes, where a daily rate of 0.0219% - just under 8% per annum – is applied to the outstanding amount from the payment date to the date the tax is paid. The deferred amount, including the interest, will attach to the property and will have to be paid before the property is sold or transferred.
The Government does not propose at this time to introduce a wealth tax but all taxes and potential taxation options are constantly reviewed.