Written Answers Nos. 129-147
129. Deputy Aindrias Moynihan asked the Minister for Finance the steps he is taking to ensure householders with issues of household subsidence can avail of home insurance; and if he will make a statement on the matter. [53068/19]
View answerAt the outset the Deputy should note that neither I, as Minister for Finance, nor the Central Bank can interfere in the provision or pricing of insurance products or have the power to direct insurance companies to provide cover to specific individuals or businesses. This position is reinforced by the EU framework for insurance (Solvency II Directive) which expressly prohibits Member States from doing so.
The provision of insurance is a commercial matter for insurance companies, which is based on a proper assessment of the risks they are willing to accept. This assessment will in many cases include insurers own presumptions based on their private modelling and research around issues such as subsidence. Unfortunately, if an insurer is of the view that there is a significant probability of a claim for subsidence or flooding reasons because of where a property is located, it generally is not going to provide insurance cover. This is because it will argue that there is no longer the possibility of a claim but the certainty of one and therefore this type of risk can no longer be described as an insurable one.
Finally, you should be aware that a consumer can make a complaint to the Financial Services and Pensions Ombudsman in relation to any dealings with a Financial Services or Insurance provider during which they feel they have been unfairly treated. In addition, individuals who are experiencing difficulty in obtaining insurance or believe that they are being treated unfairly may contact Insurance Ireland which operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to insurance (01 676 1914 or feedback@insuranceireland.eu).
130. Deputy David Cullinane asked the Minister for Finance the administrative costs including cost of collection and collection of arrears of the household charge that were borne by the Revenue Commissioners in each of the years 2013 to 2018; and if he will make a statement on the matter. [53081/19]
View answerSection 156 of the Finance Local Property Tax Act 2012 (as amended) converted all arrears of Household Charge (HHC) that were outstanding on 1 July 2013 to Local Property Tax (LPT), increased the amount due to €200, and made Revenue responsible for collection.
The administrative costs in respect of HHC are incorporated into the overall cost of administering LPT and are not separately costed. The total administrative cost of LPT for 2013 and 2014 (start-up years) was €27m and €20m respectively while each subsequent year (2015 to 2018) averaged €13m.
For the Deputy’s information, the following table (1st row) sets out the total amounts of LPT, including HHC arrears, collected by Revenue each year from commencement in 2013 to 2018. The table (2nd row) also separately sets out the amounts of HHC collected each year.
|
|
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
|
LPT – Total Collection (including HHC) |
€309m |
€477m |
€482m |
€462m |
€478m |
€483m |
|
HHC Component |
€2m |
€45m |
€13m |
€6m |
€3m |
€2m |
131. Deputy David Cullinane asked the Minister for Finance the progress the National Treasury Management Agency has made to date in divesting the Ireland Strategic Investment Fund of its assets in fossil fuel companies as required by the Fossil Fuel Divestment Act 2018; and if he will make a statement on the matter. [53101/19]
View answerThe Fossil Fuel Divestment Act, 2018 (the Act) was signed into law by the President on 17 December 2018. The National Treasury Managment Agency (NTMA) has informed me that with effect from that date, it has endeavoured to ensure that the assets of ISIF are not directly invested in any undertaking that generates (or whose subsidiary undertaking generates) 20% or more of its turnover from the exploration for, extraction or refinement of Fossil Fuels (i.e. oil, natural gas, peat, coal or any derivative thereof intended for use in the production of energy by combustion). In the case of any indirect investment (such as the investment of ISIF assets in pooled investment vehicles), the NTMA endeavours to ensure that the indirect investment’s exposure to such fossil fuel undertakings is 15% or less.
In anticipation of enactment of the Act, ISIF developed an initial “Fossil Fuel Exclusion list” of 148 companies in which it would not invest. ISIF had exposure to approximately €72 million worth of stocks and bonds in 38 individual companies contained in that initial list, and these were sold in December 2018 and early January 2019.
In July 2019, the NTMA took the decision to extend the list of restricted companies by a further 33 names and instructed its managers to divest from 15 of those companies.
ISIF is currently finalising its third review before year end which will see the Fossil Fuel Exclusion List extended before year end from the original 148 names to over 200.
The Fossil Fuel Exclusion list is published on ISIF's website. Compliance with the Act is actively monitored and reviewed with a view to ensuring that the Fossil Fuel Exclusion list is updated regularly and that any necessary divestment is actioned.
132. Deputy Peter Burke asked the Minister for Finance the amount paid out in tax refunds for private health insurance in 2018; and if he will make a statement on the matter. [53124/19]
View answerI am advised by Revenue that the overall cost associated with tax relief on health insurance for the years 2004 to 2017 is published in the Costs of Tax Expenditures table on Revenue’s website at: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/costs-expenditures.aspx The relevant row is ‘Medical Insurance Relief’ and 2017 is the latest year for which data are available. The table shows that in 2017 the cost of Medical Insurance Relief was €350 million in respect of 1,271,400 claimants.
133. Deputy Darragh O'Brien asked the Minister for Finance the annual anticipated number of recipients of the help-to-buy scheme in 2020 and 2021; the anticipated median payment under the scheme; and the anticipated expenditure per annum. [53212/19]
View answerThe number of recipients, and associated tax cost, of the Help to Buy (HTB) scheme in 2020 and 2021 depends on a wide range of factors, such as market conditions, housing supply, amount of income tax paid in previous years by the applicants etc. It is therefore not possible to estimate the take-up in these years.
On the basis of the projected outturn for 2019, my Department estimated that the Exchequer cost of extending the measure beyond the original sunset clause of 31 December 2019, could be of the order of €100m per annum for each of the next two years, provided current trends persist.
I am advised by Revenue that the most recent data on cost and uptake indicates that between January 2019 and end November 2019, some 5,933 HTB claims were approved at a cost to the Exchequer of €93.9 million; these figures are broadly in line with the projections made by Department in advance of Budget 2020.
The Deputy may be interested in detailed figures on the HTB scheme from its introduction to date which are available on the Revenue website at the following link: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/index.aspx.
134. Deputy Robert Troy asked the Minister for Finance the data in each of the years 2014 to 2018 and to date in 2019 for rejected bank finance applications by SMEs that were appealed to the Credit Review Office; the number and percentage of applications successfully appealed and for which finance was sanctioned; and the number and percentage of applications that were not successfully appealed, in tabular form. [53284/19]
View answerSince the Credit Review Office (CRO) was established, in 2010, the Credit Reviewer has issued regular formal reports which contain details on the appeals processed. The reports can be found on the website www.creditreview.ie
Details of the number of appeals for the period in question have been collated and presented in the following table, as requested.
The Deputy may wish to note that, in addition, to the formal Credit Review, the CRO Helpline has taken 1,921 calls, which has resulted in many borrowers’ queries and credit issues being resolved before a formal appeal process was necessary.
As per the guidelines for those institutions that participate in the credit review process, banks are required to ‘comply or explain’, if they do not agree with the opinion of the CRO.
The CRO also provided figures for cases where new information was discovered as a result of the review process that resulted in a bank requesting the case to be withdrawn and made the credit available to the borrower.
Where the CRO upholds a bank’s decision not to lend, it provides the borrower with a set of recommendations to address the weaknesses in the proposal. There are a number of specific Information documents on the CRO website that were developed to address common issues, faced by borrowers.
It should be noted that cases are abandoned for a number of reasons such as the borrower obtaining credit elsewhere, or it becoming evident to the borrower that the loan proposal is not viable after speaking with the Credit Reviewer.
|
Year |
Total no. of cases |
Borrower upheld and received credit |
Borrower upheld and did not receive credit |
Withdrawn by bank |
Bank upheld |
Abandoned |
Work in progress |
|
2014 |
82 |
33 |
5 |
4 |
31 |
9 |
|
|
2015 |
106 |
31 |
10 |
3 |
43 |
18 |
|
|
2016 |
105 |
34 |
13 |
8 |
39 |
11 |
|
|
2017 |
72 |
29 |
11 |
6 |
15 |
11 |
|
|
2018 |
77 |
30 |
8 |
6 |
25 |
8 |
|
|
2019 to date |
61 |
18 |
6 |
6 |
16 |
3 |
12 |
|
Total |
503 |
175 |
53 |
33 |
169 |
60 |
12 |
135. Deputy Robert Troy asked the Minister for Finance the number and proportion of SMEs that requested finance from non-bank providers in each of the years 2014 to 2018 and to date in 2019; and if the same information will be provided for SMEs that requested finance from bank providers in tabular form. [53285/19]
View answerThe Central Bank of Ireland or the Department of Finance does not collate or publish loan level data for non-bank and bank finance providers in the State.
However, my Department, closely monitors developments in the SME credit environment, including the application rates of SMEs, through its biannual SME Credit Demand Survey. This informative survey series can be accessed through the Department’s website here:
https://www.gov.ie/en/collection/788135-credit-demand-surveys/
The SME Credit Demand survey is based on a randomly selected representative sample of 1,500 SMEs. The sample error for a survey of this nature is good and has a margin of error of +/- 2.66%, at a 95% significance level.
SMEs were asked in separate questions if they applied or made inquiries for bank finance and non-bank finance respectively. The proportion of SMEs that answered yes to these questions is set out in percentage terms in the following table.
|
Year |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
|
% Bank applications for credit |
35% |
32% |
26% |
20% |
26% |
25% |
|
% Non-bank applications for credit |
11% |
10% |
8% |
7% |
7% |
7%* |
*Preliminary estimate, to be confirmed.
136. Deputy Robert Troy asked the Minister for Finance the data in each of the years 2014 to 2018 and to date in 2019 for SME bank finance applications which required some form of collateral; the proportion of such applications which required a personal guarantee from the business owner; and the proportion of applications which required collateral in the form of a property of the business or other forms of collateral, in tabular form. [53287/19]
View answerThe Central Bank of Ireland or the Department of Finance does not collate and publish loan level data.
However, my Department, closely monitors developments in the SME credit environment, including the level of SME applications for credit that required some form of collateral and the type of collateral sought by the bank, through its biannual SME Credit Demand Survey. This informative survey series can be accessed through the Department’s website https://www.gov.ie/en/collection/788135-credit-demand-surveys/. The survey also reports on the terms and conditions attached to bank loans including personal guarantees.
The SME Credit Demand Survey is based on a randomly selected representative sample of 1,500 SMEs. The sample error for a survey of this nature is good and has a margin of error of +/- 2.66%, at a 95% significance level.
The following table sets out the overall percentage of applications that required collateral with a percentage breakdown of the type of collateral for each survey. It should be noted, for comparative purposes, the survey to March for each year was selected.
|
|
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
|
Percentage of applications requiring collateral |
43% |
49% |
33% |
45% |
39% |
39% |
|
Buildings |
15% |
14% |
10% |
12% |
10% |
12% |
|
Land |
6% |
9% |
|
6% |
8% |
8% |
|
Personal assets of owner |
14% |
8% |
10% |
7% |
7% |
8% |
|
Machinery & Equipment |
4% |
8% |
6% |
8% |
7% |
5% |
|
Accounts receivable |
N/A |
3% |
3% |
3% |
2% |
4% |
|
Inventories |
2% |
1% |
N/A |
N/A |
N/A |
N/A |
|
Other |
3% |
6% |
2% |
18% |
12% |
12% |
|
Percentage of applications requiring no collateral |
57% |
51% |
67% |
55% |
61% |
61% |
The following table sets out the percentage of loan applications that required a personal guarantee.
|
|
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
|
Percentage of loan applications requiring a personal guarantee |
44% |
46% |
45% |
28% |
47% |
50% |
137. Deputy Robert Troy asked the Minister for Finance the details of the SBCI business support investment platform and funding for the SME sector obtained via the European Investment Bank. [53288/19]
View answerThe Strategic Banking Corporation of Ireland (SBCI) is Ireland’s national promotional institution. The purpose of the SBCI is to deliver effective financial supports to Irish SMEs to address gaps and potential failures in the Irish SME finance market as well as encouraging competition and innovation, and facilitating the efficient and effective use of EU resources and financial instruments. The SBCI achieves this through the provision of low cost liquidity and risk-sharing guarantee activities that support the provision of appropriately priced, flexible funding to Irish SMEs.
Instead of lending directly to SMEs, the SBCI operates through partner finance providers, known as on-lenders. The SBCI has provided funding to a mixture of both banks and non-bank finance providers and currently has 7 on-lenders, 4 bank and 3 non-bank finance providers: AIB, Bank of Ireland, Ulster Bank, KBC, Finance Ireland Limited, Bibby Financial Services Ireland, and FEXCO Asset Finance.
European partners provide long-term funding at attractive rates to the SBCI to support Irish SMEs. The total funding available to the SBCI from these funding partners is currently €1 billion. Of this €1 billion, the European Investment Bank (EIB) has provided loan facilities of €400m to the SBCI, which have been fully distributed to SMEs via the SBCI’s on-lending partners.
In addition, the SBCI has received guarantees from the European Investment Fund (part of the EIB Group) to support SBCI loan schemes with a total value of €750m. The Schemes supported by these guarantees are the Agriculture Cashflow Support Loan Scheme (€150m), the Brexit Loan Scheme (€300m) and the Future Growth Loan Scheme (€300m).
138. Deputy Robert Troy asked the Minister for Finance the details of each bank and non-bank on lender of SBCI funds in 2018 and to date in 2019; and the amount loaned to SMEs, in tabular form. [53310/19]
View answerThe Strategic Banking Corporation of Ireland (SBCI) is Ireland’s national promotional institution. The purpose of the SBCI is to deliver effective financial supports to Irish SMEs to address gaps and potential failures in the Irish SME finance market as well as encouraging competition and innovation, and facilitating the efficient and effective use of EU resources and financial instruments. The SBCI achieves this through the provision of low cost liquidity and risk-sharing guarantee activities that support the provision of appropriately priced, flexible funding to Irish SMEs.
The SBCI has provided funding to a mixture of both banks and non-bank finance providers and currently has 6 on-lenders, 4 bank and 3 non-bank finance providers: AIB, Bank of Ireland, Ulster Bank, KBC, Finance Ireland Limited, Bibby Financial Services Ireland, and FEXCO Asset Finance. Additionally in 2018, the SBCI had a further non-bank finance provider as an on-lender, First Citizen Agri Finance, this facility was closed in October 2018 following First Citizen Agri Finance raising commercial funding.
The SBCI has supported SME lending in 2018 and to date in 2019 as follows:
|
2018 |
|
|
|
|
|
Total |
Liquidity |
Risk Sharing (Brexit loan Scheme) |
|
Number of SBCI Loans secured by SMEs |
3207 |
3149 |
58 |
|
Total lending |
€152,585,547 |
€139,365,547 |
€13,220,000 |
|
2019 |
|
|
|
|
|
Total |
Liquidity |
Risk Sharing (Brexit loan Scheme and Future Growth loan scheme) |
|
Number of SBCI Loans secured by SMEs |
2898 |
2087 |
811 |
|
Total lending |
€260,329,384 |
€101,951,404 |
€158,377,980 |
It is not possible to give an individual on-lender breakdown for commercial sensitivity reasons.
Please note that for 2019 the Risk sharing figures refer to loans that have been sanctioned, but are still awaiting drawdown. The vast majority of the Future Growth Loan Scheme loan approvals occurred in Q4 2019 and drawdown details will not be available until early Q1 2020.
139. Deputy Robert Troy asked the Minister for Finance the lending targets the SBCI has set for lending to SMEs in 2019 and 2020; and the progress to date on same. [53311/19]
View answerThe Strategic Banking Corporation of Ireland (SBCI) delivers effective financial supports to Irish SMEs that address failures in the Irish credit market, while driving competition and innovation and ensuring the efficient use of available EU resources. The SBCI achieves this aim through the provision of low cost liquidity and risk-sharing activities supporting the provision of appropriately priced, flexible funding to SMEs. The SBCI does not lend directly to SMEs, but rather provides funding through its finance partners, both bank and non-bank.
This funding is provided through both the provision of low cost liquidity as well as through risk sharing schemes, the Brexit Loan Scheme and the Future Growth Loan Scheme.
The SBCI’s lending target for 2019 was €260m. The SBCI’s total lending so far in 2019 has been €260,329,384. This consists of loans of €101,951,404 from the low cost liquidity provided to the SBCI’s on-lenders as well as loans of € 158,377,980 from the SBCI’s risk sharing schemes, the Brexit Loan Scheme and the Future Growth Loan Scheme. Please note that for 2019 the risk sharing figures refer to loans that have been sanctioned, but are still awaiting drawdown. The vast majority of the Future Growth Loan Scheme loan approvals occurred in Q4 2019 and drawdown details will not be available until early Q1 2020.
Targets for 2020 are in the process of being set.
140. Deputy Willie Penrose asked the Minister for Finance the number of times he has met either the CEO and-or the chairperson of each bank located here to date in 2019, in tabular form; and if he will make a statement on the matter. [53334/19]
View answerThe information is as follows:
|
BANK |
OFFICIAL |
DATE |
|
SBCI |
CEO |
15/01/2019 |
|
KBC |
CEO & CHAIR |
16/01/2019 |
|
AIB |
CEO & CHAIR |
19/02/2019 |
|
PTSB |
CEO & CHAIR (BOARD MEETING) |
26/03/2019 |
|
BANK OF IRELAND |
CEO & CHAIR |
01/04/2019 |
|
KBC IRELAND |
CEO |
27/06/2019 |
|
ULSTER BANK IRELAND |
CEO |
18/07/2019 |
|
SBCI |
CEO |
20/11/2019 |
|
BANK OF IRELAND |
CEO |
21/11/2019 |
141. Deputy Pearse Doherty asked the Minister for Finance if there is a difference in the carbon tax applied to smokeless coal and regular coal. [53357/19]
View answer‘Coal’ is defined in section 77 of the Finance Act 2010 as any fuel in solid form manufactured from coal falling within the EU customs classification Combined Nomenclature (CN code) 2701 or from lignite falling within the CN code 2702 or any energy product within the meaning of Article 2.1 of the Energy Tax Directive (2003/96/EC) in solid form. Solid Fuel Carbon Tax legislation does not set out separate definitions and rates for ‘smokeless coal’ and ‘regular coal’.
I understand that distinctions between regular and smokeless coal are made in the regulatory regime for environmental standards of solid fuel that is overseen by the Department of Communications, Climate Action and Environment which is enforced by local authorities in areas that are designated for use of certain types of solid fuel under air pollution legislation. This is a separate legal and regulatory regime and is not linked to the rates of Solid Fuel Carbon Tax, which is based on the amount of CO2 emitted by a given solid fuel product.
142. Deputy Willie Penrose asked the Minister for Finance the steps he will take to ensure a person (details supplied) receives their appropriate tax free allowances in view of the fact they have returned to work; and if he will make a statement on the matter. [53416/19]
View answerI am advised by Revenue that any person starting an employment should provide his/her Personal Public Service Number (PPSN) to the new employer. The employer should then notify Revenue of the new employment and should request a Revenue Payroll Notification (RPN) on behalf of the employee. The RPN will confirm the correct tax credits, rate bands and Universal Social Charge (USC) rates to be applied to the employee’s salary.
Once these steps are completed, Revenue will issue a Tax Credit Certificate to the employee confirming the applicable tax credits and rate bands. If these steps are not completed the new employee may pay too much tax as the employer will be required to deduct on the emergency basis.
Revenue has confirmed to me that the person in question does not have an active employment on its records. The person should immediately provide her PPSN to her new employer and ensure that an RPN is requested from Revenue (by the employer). This will ensure that she receives her correct tax credit and rate band entitlements and pays the correct amount of USC.
If the person requires any further assistance with this matter she should contact Revenue’s National PAYE Helpline at 01-7383636.
143. Deputy Darragh O'Brien asked the Minister for Finance the number of staff employed by Home Building Finance Ireland; and the staffing costs per annum. [53417/19]
View answerI am advised by Home Building Finance Ireland that their estimated staff costs to year end 2019 are €2.5 million. This cost is inclusive of employer pension cost and employer PRSI. The current headcount in Home Building Finance Ireland is 21.
144. Deputy Darragh O'Brien asked the Minister for Finance the amount of finance available per annum for Home Building Finance Ireland to lend to developers; the amount loaned out to date; and if he will make a statement on the matter. [53418/19]
View answerHome Building Finance Ireland ("HBFI") was provided with a funding facility of €750m consisting of €20m equity and a loan facility of €730m. In the first nine months of operation to 31st October 2019, HBFI approved facilities of €102m, enabling the delivery of 513 new homes. The full €730m is available to HBFI for lending and the amount approved each year will vary depending on a number of factors, not least of which will be the level of demand from the construction sector. While the overall amount available will decrease as money is lent, the fund will be replenished as developments are completed and loan facilities are repaid.
Should the initial €730m provided be utilised in full at any point in time HBFI has the ability to raise a further €750m from other market sources through the issue of bonds and securities on commercial terms. Further information is available at www.hbfi.ie
145. Deputy Darragh O'Brien asked the Minister for Finance the potential impact of a €650 million increase in Home Building Finance Ireland borrowing on the general Government debt, general Government balance and calculations of available financial resource fiscal space under EU and national rules; and if he will make a statement on the matter. [53419/19]
View answerHome Building Finance Ireland (HBFI) was established in late 2018 with debt and equity funding of up to €750 million made available by the Ireland Strategic Investment Fund (ISIF) to HBFI for the achievement of its purposes at the direction of the Minister for Finance.
HBFI has been classified within the general government sector by the Central Statistics Office. Accordingly, its activity may impact on general government debt and the general government balance. As the ISIF is also within general government, ISIF’s funding to HBFI has no impact on general government debt.
The ISIF funding is in the form of an equity investment of €20 million, coupled with committed loans to HBFI of up to €730 million that will be provided on an on-going basis to meet HBFI’s lending needs as they arise. It is currently expected that the funding available from ISIF will be sufficient to ensure that HBFI has the capacity to fund the delivery of up to 7,500 homes over a five-year period. It is important to note that this funding may be recycled over the course of HBFI’s life.
In the event that HBFI may require further funding it has the ability to raise this from other market sources through the issuance of bonds and securities on commercial terms. Any such issuance will count towards general government debt.
HBFI’s purpose is to provide financing to commercially viable residential property developments to increase the supply of new homes. Such transactions are classified as financial transactions in the European System of Accounts 2010 statistical framework. Financial transactions do not count as general government revenue or expenditure and, therefore, do not impact on the general government balance.
The Irish public sector remains highly indebted. In modified gross national income (GNI*) terms, a better barometer of debt sustainability than debt-to-GDP, our debt ratio in 2019 is over 100 per cent. HBFI borrowings of €650m would increase this by c. 0.3 percentage points.
146. Deputy Darragh O'Brien asked the Minister for Finance the estimated first and full-year cost of introducing a special 9% VAT rate on residential construction. [53420/19]
View answerI am advised by Revenue that a tentative estimate of the cost of introducing a 9% VAT rate specific to residential construction is in the region of €270m in the first year and €310 for a full year.
This estimate is based on extrapolation from data held by Revenue, the Central Statistics Office and the Department of Housing, Planning and Local Government in relation to the projected level of residential completions for 2020 and the average selling price of such properties. It does not take account of any behaviour change in the market as a consequence of the proposed measure.
147. Deputy Darragh O'Brien asked the Minister for Finance the first and full-year cost of allowing local property tax deductibility for landlords when calculating rental profits. [53431/19]
View answerThe Report of the Working Group on the Tax and Fiscal Treatment of Landlords was published by my Department on Budget Day 2017.
Ten policy options were put forward in the report, divided into short-term, medium-term and long-term timeframes. Option 2 is for the introduction of Local Property Tax (LPT) deductibility for landlords.
I am advised by Revenue that the estimated cost of allowing LPT as an allowable expense against rental income for Income Tax purposes is in the region of €12 million in the first year and €20 million in a full year. This estimate is based on LPT returns that indicate a property is a non-principal private residence and assumes that each relevant owner has sufficient rental income against which to offset the LPT paid.
LPT is a relatively small expense and therefore the measure is unlikely to make a significant difference to the position of any individual landlord in cash terms, so may not be regarded by landlords as a sufficient measure to encourage them to stay in or enter the rental market. The measure would also have a deadweight cost in respect of landlords who do not intend to leave the rental market and would create a more favourable position for landlords of property compared to owner-occupiers, as owner-occupiers cannot claim a tax deduction for LPT. I note that one of the recommendations of the 2015 review of the LPT carried out by Dr. Don Thornhill on behalf of the Minister for Finance was that LPT payments should not be allowed as a deduction to landlords against income or corporation tax. Dr. Thornhill’s view was that deductibility for landlords does not rest easily with the concept of the LPT as a tax on the amenity value of residential properties rather than as a business cost. Owners and tenants of rental properties both derive value from the amenity value of these properties (the owner in the form of the rent and the tenant from living in the property). This contrasts with the situation regarding local authority rates on commercial properties. Owner occupiers are not allowed to claim LPT as a deduction against income tax. It is not appropriate on conceptual and equity grounds that they should. Dr Thornhill considered that there was a need to ensure equity between owners of all residential properties, whether owner occupiers or landlords, and that it would be inappropriate to allow LPT as a deduction against the taxation of income from rents on residential properties. The Inter-Departmental LPT Review Group that reported to me in 2019 was in agreement with Dr Thornhill’s recommendation and the rationale which underpinned it.
