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Property Tax Review

Dáil Éireann Debate, Wednesday - 17 April 2019

Wednesday, 17 April 2019

Questions (38)

Michael McGrath

Question:

38. Deputy Michael McGrath asked the Minister for Finance if he will introduce legislative changes in 2019 for the local property tax, LPT; the reforms he will introduce for the income thresholds for the LPT deferral; the reforms he will introduce in terms of exemptions; and if he will make a statement on the matter. [17998/19]

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Oral answers (8 contributions)

This question relates to LPT. The Minister has signalled his intention to defer the revaluation of properties which was due to take place in November 2019. However, questions need to be answered regarding other recommendations in the LPT review such as changes to the income thresholds for deferrals, as well as other exemptions which are time limited and will fall in the absence of new legislation. Will the Minister clarify if he intends to bring in local property tax legislation this year?

The review I initiated of the LPT has been completed by the Department of Finance in conjunction with the Departments of the Taoiseach, Public Expenditure and Reform and Housing, Planning and Local Government, as well as the Revenue Commissioners. In accordance with its terms of reference, the review focused on the impact of house prices on LPT liabilities under a series of scenarios involving different rate and tax band structures. However, against a background of significant but geographically uneven increases in price levels, I believe it is necessary to engage in further consultation to identify a scenario which would deliver on the condition I set, namely, that there should be relative stability for all taxpayers in their liabilities and that any increases should be modest, affordable and fair.

I decided to defer the valuation date from 1 November 2019 to 1 November 2020. This will give sufficient time for the Oireachtas budgetary oversight committee to consider the review report in the context of the committee’s recommendations in its report of 21 March 2018. Importantly, as a result of my decision, the LPT bills of those liable for the tax will not be increasing in 2020.

On deferrals and exemptions, I do not wish to pre-empt the work of the budgetary oversight committee. However, I expect the committee can complete its consideration of the review’s findings and recommendations in a timeframe to allow me to put in place the necessary legislative proposals in advance of any change from 1 November 2020.

There are several exemptions in place which are generally open-ended. However, there are two which have a fixed statutory end date of 31 December 2019. These particular exemptions will be applied in respect of 2020 liabilities by Revenue on an administrative basis pending necessary legislation. One of these exemptions relates to properties purchased by first-time buyers between 1 January 2013 and 31 December 2013. These exemptions will be continued.

I thank the Minister for his reply. Will he clarify if he received any advice that not proceeding with the revaluation of properties raised some constitutional questions? There are some constitutional concerns about the validity of the LPT as a result of not doing that. Will the Minister clarify if the exemptions, which are time limited and are due to lapse at the end of October 2019, will continue on an administrative basis, even in the absence of legislation that may or may not be introduced? The key point is the 11,800 properties bought between January 2013 and 2019. The actual number may be far higher because many of the property owners did not have an obligation to register for the LPT. That figure is probably between 50,000 and 60,000. Will the Minister clarify their status as a result of these changes?

On the Deputy’s question about receiving legal advice on this course of action, yes, I had an extensive amount of engagement within the Government on this issue. I believe a deferral of one year, while showing that I intend to use that period in order to gain agreement for the future of this tax and its retention, is well inside the space of what can be deemed constitutional.

I will be doing this on the basis of an order. Accordingly, the two exemptions, to which the Deputy referred, will continue. The figures he has referred to, particularly the higher figure, are ahead of my understanding of what those figures are. In either event, by use of order in the way I have described, it will allow those exemptions to continue.

Will the Minister put on the record his understanding of the number of properties purchased since 2013 which are currently exempt and for which the exemption would normally fall later this year?

He did not really answer the question as to whether any concerns were raised. He has given us his view that he remained within the constitutional parameters in not going ahead with the revaluation.

Will he clarify his intention around the income thresholds for a deferral? The report recommended a 20% increase in the qualifying income threshold to allow those to defer. Almost 60,000 households already availed of that deferral option last year. Many more would like to do so but their current incomes are above the allowable threshold. That is an issue on which the Minister should move quickly. When does the Minister intend to bring in legislation to deal with these issues?

Three points were put to me. First, in terms of the number of properties that are covered by the exemption to which the Deputy referred, the figure he used is higher than figures that have been shared with me to date.

What has been shared with the Minister? He might share it with us.

I do not have the figure available to me now, but I will share it with the Deputy and I will come back to him on it. In relation to his second question on whether concerns were raised with me, the advice that I have received on this matter showed that it is within the power that is available to me to continue with the deferral for one year on the basis of an order.

In response to when I plan to introduce legislation to deal with all these matters, I will do that when I believe I have a basis of support for it, which I hope to gain in the Committee on Budgetary Oversight. That would then allow agreement on this matter within the Dáil. It will require primary legislation to change the income thresholds to which the Deputy referred. If an individual or couple go beyond the income thresholds for deferral, they are still entitled to a deferral of 50%. I have asked the Revenue Commissioners to give me an indication of the number of people that might be affected by it.

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