Dáil Éireann Debate, Tuesday - 9 November 2021
115. Deputy Richard Boyd Barrett asked the Minister for Finance if he will consider abolishing the local property tax and replace the tax with a graduated second, third, fourth and so on home tax ensuring that the family home is not subject to a property tax in view of increasing inflation; and if he will make a statement on the matter. [54398/21]
View answerThe Finance (Local Property Tax) (Amendment) Act 2021 fulfils the Programme for Government commitment to bring forward legislation in relation to the Local Property Tax (LPT) on the basis of fairness and that most homeowners will face no increase in their LPT liability. The Act provides for a cut in the main rate of the tax and widening of the valuation bands to make the changes affordable. This means that the majority of homeowners are likely to see either a decrease or no change in their LPT liability. Where increases arise, the majority will be a single band, notwithstanding the significant increases in property values since 2013.
The LPT legislation provides for the possibility of deferring the charge to LPT in certain circumstances to assist individuals who may have difficulty paying the tax. A qualifying person may opt to defer, or partially defer, payment of the tax. Where a person qualifies for a full deferral then 100 per cent of the liability can be deferred. Where a person qualifies for partial deferral, then 50 per cent of the liability can be deferred. The balance of 50 per cent of the tax must be paid. The deferred tax remains as a charge on the property and must be paid before a sale or transfer can be completed. Interest is charged on the deferred amount. The Finance (Local Property Tax) (Amendment) Act 2021 provides that for 2022 the deferral thresholds will increase to €18,000 for a single owner and €30,000 for a couple. The thresholds for 50 per cent relief are €30,000 (single) and €42,000 (couple). In addition, the rate of interest charged on deferred LPT liabilities will reduce from 4 per cent to 3 per cent annually.
Where a liable person does not qualify for or does not wish to avail of a deferral, phased payment of LPT can be used to assist with budgeting. The Government is aware of the difficulties facing many individuals and families, and for this reason a wide variety of methods for payment of the LPT is available from which liable persons can choose the method most suited to their individual circumstances. Throughout the pandemic, Revenue has engaged extensively with individual taxpayers experiencing financial pressures due to the pandemic to agree flexible arrangements that best suit their circumstances, including in respect of LPT liabilities and will continue to fully engage with taxpayers facing financial difficulties.
The LPT is an effective, stable and sustainable source of revenue for the Local Government Sector. All property owners benefit from the essential local services LPT helps to fund. Accordingly, it is equitable that the cost of providing the services should be shared by as broad a spectrum of owners as possible. It is unlikely that a charge levied solely on second and subsequent homes would generate sufficient income to replace the revenue from LPT. This funding gap would ultimately need to be met by the Exchequer in the form of increased general taxation. Landlords faced with the prospect of increased charges could, in turn, pass on the resulting costs to tenants. This would exacerbate the already difficult housing situation, particularly in large urban centres.
I have no plans along the lines suggested in the Deputy’s question.
