The bands used for the Local Property Tax (LPT) – an initial band of €0 to €100,000 and 18 bands of €50,000 width from €100,001 to €1 million – are those recommended by the Thornhill Group, the expert group which advised on the design of the tax. The grouping of properties into bands for property taxation purposes was also recommended by the 1982 and 2009 Commissions on Taxation. Grouping properties into valuation bands, with the rate applying at the mid-point of the bands – in effect creating fixed sum and certain charges for each band – can ease the valuation challenges. In devising the bands, a balance should be struck between the width of the bands and avoiding substantial liability differences between adjacent bands. The bands used for the LPT are much narrower than those suggested by the 2009 Commission on Taxation.
It is unavoidable that some individuals will benefit or lose no matter what bands are chosen, and narrower bands would make it more difficult for taxpayers to decide the correct band for their property. As the Deputy states, if the current first band of €0 to €100,000 was replaced by two €50,000 bands, this would lead to lower LPT payments for owners of properties valued below €50,000, which would pay tax at €45 in a full year (0.18% of €25,000, the mid point between €0 and €50,000). However, it would lead to higher LPT payments for properties valued between €50,001 and €100,000, which would pay tax of €135 in full year (0.18% of €75,000), rather than the current charge for all properties valued between €0 and €100,000 of €90 in a full year (0.18% of €50,000). The charge of €90 in a full year is below the Household Charge of €100 which was payable in 2012 in respect of all properties, including those valued below €50,000.
I am satisfied the current system of valuation bands strikes a good balance between ease of assessment and a smooth progression of liabilities between the valuation bands.
