Peadar Clohessy
Ceist:11 Mr. Clohessy asked the Minister for Finance the yield which has been produced by the residential property tax since its introduction; the number of properties in each year to which the tax applied.
Ceisteanna—Questions. Oral Answers. - Residential Property Tax Yield.
The reply is in the form of the following tabular statement:
|
Year |
Yield£m |
Number of persons* |
|
1983 |
1.0 |
6,178 |
|
1984 |
1.1 |
5,955 |
|
1985 |
2.1 |
5,644 |
|
1986 |
1.8 |
5,638 |
|
1987 |
2.0 |
5,544 |
|
1988 |
2.5 |
5,708 |
|
1989 |
5.0 |
10,403 |
|
1990 |
5.3 |
9,805 |
|
1991 |
5.7 |
9,782 |
|
1992 |
7.2 |
12,500 |
*As some taxpayers have a liability to residential property tax based upon more than one property, precise figures are not available on the number of properties to which the tax applies.
Is the Minister aware that borrowings are not allowable and that there can be anomalies in this tax? If somebody had a house worth £90,000 and had borrowed £90,000, he would have to pay the full tax. Has the Minister given any consideration to allowing any relief up to a ceiling of £20,000 or £30,000 so that hardship will not be caused to people who are honest enough to come forward and explain their position?
The tax is small and charged on the market value of the residential property at the rate of 1.5 per cent on the excess of the market value over the exemption limit. The exemption limit for this year is £91,000. The liability to the tax arises only where the household income exceeds £28,100. In addition, two types of relief are provided. The first applies where the household income exceeds the income exemption limit by £5,000 and the second reduces the tax payable by 10 per cent in respect of each dependent child. These reliefs diminish the yield on the tax by about 20 per cent.
Borrowings?
On borrowings, if the Deputy knows of an anomaly or of a hardship case I will certainly look at such case. The change was made to try to bring into the tax net people who were clearly defaulting.
Would the Minister agree that the value of the threshold has not significantly varied over the ten years in which it has been in operation and that therefore in 1992 the number of persons paying the tax has effectively doubled? What is the Minister's advice concerning the number of people who fall within this category and what is the problem about getting them into the category? Would the Minister agree that this tax is being very selectively applied?
The increase in number is probably a reflection of how few were in the category in the first place. There is no clear estimate but 12,500 is only a small fraction of the number of houses over the limit in the State. The difficulty is in relation to compliance and that is the reason I made some changes in regard to that in the budget.
Is it true that the Government is considering extending the scope of the residential property tax?
There is no truth in that. In relation to residential property tax the Government seeks to ensure that people who should pay this tax are in fact paying it.
Can the Minister expand on his reply to Deputy Yates in regard to property owners whose substantial mortgages on their homes exceed the limits on the residential property tax and result in their being liable for the double payment? From what the Minister said I gather it is not his intention that such people should be required to pay residential property tax where they are trying to meet heavy mortgage repayments on the same dwelling.
In the calculation of this tax of £7 million — which is a small amount — if there is a case of hardship we will, as we have done about family size, income limits and marginal relief, be fair with those who have the decency to come forward. As the Deputy will be aware one could plaster walls with the number of requests from property companies and others to give a valuation for the property.
The Minister appeared to indicate that there was some appeals system but I did not realise there was such a system until the Minister referred to hardship cases. How does a Deputy bring a hardship case to the attention of the authorities? Is there an appeals system?
As I understood it, Deputy Yates referred to the case of a borrower who faced major difficulties. If such a case came to my attention I would certainly examine it. The whole principle of this tax is to get people to comply. I am not opposed to looking at hardship cases.
Is the Minister suggesting he would amend the Finance Acts or that he has discretion in the matter?
Last year and this year we introduced some amendments in regard to property tax and its collection. As the Deputy will be aware this tax has been in operation for the past ten years and, like me, I am sure he made representations many times about it. The Revenue Commissioners are rather generous with people who come forward.
We would appear to have broadened considerably the subject matter of this question. I am calling Deputy Michael McDowell for a final supplementary.
In view of the Minister's concession that only a small fraction of the homes to which the tax is applicable are in the net, and in view of the phrase he used that some people have the decency to come forward and acknowledge their liability for tax, would he agree it is time this tax was replaced by one which is fair to all and applies to everyone uniformly rather than rely on people's circumstances and their sense of honesty and the honesty of their advisers to determine the amount of tax they pay into the Exchequer?
I am afraid that rule would apply to many other taxes as well.
The Minister never said that income tax is paid by a small fraction of people.
In relation to the residential property tax the system has continually improved since 1982. The changes in this year's budget and in the Finance Bill regarding people who are selling their homes, and the fact that the liability would carry on, will help to get more people into the system. The number of people in the net has increased from 6,000 to more than double that figure in the past ten years. The compliance regulations introduced this year will result in a substantial increase.
As long as one does not sell a house and has a flexible concience one does not have to pay.
Deputy McDowell will be aware that in the case of normal Revenue regulations when there is a charge people will pay upfront rather than wait for the evil day. That has been the source of Irish tax law for a long time.
Unless a person can sell back to his or her building society.