Vol. 446 No. 1
31 Mr. M. McDowell asked the Minister for Finance the current estimate of the annual yield of the residential property tax; the amount of that tax which was received in respect of this year by 10 October 1994; whether he has satisfied himself that the tax is borne equally throughout the country having regard to regional fluctuations in property prices; and if he will make a statement on the matter. [1653/94]
41 Mr. Callely asked the Minister for Finance if his attention has been drawn to the objection to residential property tax; if he will review this tax in 1995 with a view to abolishing it; and if he will make a statement on the matter. [1222/94]
61 Mr. Callely asked the Minister for Finance, in view of the valuation of property for residential property tax, his views on whether it is widely accepted that most owners are the best judge of the value of their property; and if he will make a statement on the matter. [1221/94]
63 Mr. M. McDowell asked the Minister for Finance the current estimate of the annual yield of the residential property tax; the amount which was received in respect of that tax this year by 10 October 1994; if he has satisfied himself that the tax is borne equally throughout the country having regard to regional fluctuations in property prices; and if he will make a statement on the matter. [1603/94]
75 Mr. Yates asked the Minister for Finance, in view of the likelihood of tax receipts for 1994 exceeding budget forecasts, if he will reconsider the Government's policy on the residential property tax; and the outcome of the review by the Government of merging local service charges and residential property tax as proposed by the Taoiseach earlier in 1994. [1217/94]
93 Mr. Callely asked the Minister for Finance if he can give an early indication of the actual yield compared to the expected yield from residential property tax for 1994; if his attention has been drawn to the high disquiet by home owners about this tax; and if he will make a statement on the matter. [1707/94]
I propose to take Questions Nos. 31, 41, 61, 63, 75 and 93 together.
The expected yield in 1994 from the residential property tax was £12 million. I am informed by the Revenue Commissioners that all residential property tax payments for 1994 have not yet been processed fully. However, at this comparatively early stage, the indications are that the yield for 1994 will be in the region of £13 million. Subject to any adjustment when the payments are fully processed, the amount received to 10 October was £12 million.
The residential property tax is levied on the same basis throughout the State but obviously those areas with higher property values and income levels will pay the greater share of the total. These variations are not simply based on whether a house is in an urban or rural area. We all know that houses in some areas of the same city tend to be more valuable than a similar house in other areas.
As regards the abolition of residential property tax, I have no proposals to do so. As for the review referred to by Deputy Yates in regard to local service charges and residential property tax, I have indicated on previous occasions that my Department has been preparing a report on property tax generally and this is being examined by the tax strategy group. Any proposals which emerge from that examination will be considered by the Government in due course.
The Government has shown that it is responsive to genuine concerns over the impact of residential property tax. These concerns were taken into account in an examination carried out in February/March this year. This resulted in the introduction of adjustments to deal with long standing anomalies and to recognise the position of certain taxpayers, while preserving the broad thrust of the budget measure. The changes eliminate possible hardship for households with elderly, incapacitated or widowed persons, while a new general hardship provision has been introduced to deal with cases not otherwise catered for. It was also decided to reduce the rate of tax applying to houses valued between £100,000 and £150,000 from a proposed 2 per cent to 1½ per cent. Marginal income-related relif was extended from £30,000 to £35,00. Finally, a deferred payment option was introduced to assist taxpayers in meeting their obligations. The effect of these adjustments has been to ease significantly the burden of the residential property tax on a considerable number of family homes.
With regard to the question of house valuation. I agree with Deputy Callely's view that house owners by and large are fairly realistic in their own estimates of the value of their property and this seems to be borne out by what research there is on the subject.
I am informed by the Revenue Commissioners that their experience of the operation of the tax indicates that the vast majority of householders tend to submit a fair and realistic value in respect of their property. This seems to be supported by the experience from the clearance certificate scheme which has applied since 1993 to properties sold for more than the residential property tax limit.
Obviously house valuation is not an exact science and for that reason, a banding system was introduced in this year's Finance Act, for houses under £100,000. This means that owners of such houses can place their house within value bands of £5,000. There is also an appeals procedure whereby if agreement cannot be reached on the value of a property, the householder has the right to appeal to an independent expert.
Would the Minister not accept that in terms of the amount of revenue it yields and in the context of the cost of administering it, complying with it and the difficulties created by it, the residential property tax is simply not worth the candle as a major component of any system of tax reform? Would he not now take this opportunity, as a member of Fianna Fáil, to indicate whether the people of Ireland can expect a promise from his party at the next election, which my party is certainly making, to repeal this tax?
Be brave now, Minister.
Deputy McDowell is being at least constructive and helpful in putting forward an alternative system. Deputy McDowell will note that since we discussed this on the Finance Bill during the summer months I have completed a comprehensive analysis and report on the various taxes. I am not in a position to give a direct reply to Deputy McDowell's question but the House will note that although the socalled experts who knew all about property and property values told me that my prediction of £28,000 to £30,000 was widely off the mark, that figure was somewhat over optimistic.
I am told you got sackfuls.
My prediction was over optimistic. We did not reach the target.
The inspectors will soon call to Montenotte in Cork and all those other places.
The Deputy has been wasting his time during the summer. He won the votes on RPT in the hills in Mayo. He did not win any votes in Dublin.
The glimmer man.
It is unfortunate that they would not allow him to go to Terenure but sent him to Mayo. We got an additional £3 million in the RPT. I agree with Deputy McDowell that the IFSC has so far this year given me an additional £70 million. The £5 tax on holidays, a loose enough arrangement, yielded £80 million.
You probably got most of that from the Taoiseach.
Deputy Rabbitte will be disappointed to know that he is excluded from that tax. Neither did the rest of us contribute to it. Less than 3.5 per cent of the 300,000 houses paid up in the end, but all these matters will be taken into account in due course.
Will the Taoiseach indicate that he will put forward to the tax review group his view that this tax should be scrapped, that it is an ideological tax and that it is not fair? For instance, is he aware that people over the age of 65 do not have to pay this tax and that some serving members of the Judiciary, who have still not retired under the new scheme, have vast salaries and are exempt from this tax while their next door neighbours on lesser salaries have to pay the full tax? Is the Minister not ashamed of this arbitrary tax and is he not determined to bring it to an end? Will he respond to a suggestion I made on two occasions when standing in for Deputy Cox on the Finance Bill by establishing an all-party committee to examine the financing of local government and forget about this tax which is an ideological Frankenstein that has done much damage?
I have completed a report on the matter. Deputy McDowell is wrong in his comments about the judge. I am sure his band rating applies up to £40,000 and therefore he should be paying the tax. Perhaps the Deputy will have a word with him.
Do former Taoisigh have to pay it?
Yes.
Are 65-year-olds exempt?
No, but their band rating, instead of applying from £25,000 to £35,000, with a one-tenth reduction for every £1,000, applies up to £40,000.
They pay less.
Yes, but they are still paying.
They get two salaries and they pay less.
The bands should be lowered next year.
I know that Deputy McDowell will never say we want tax reform for 11 months of the year and not for the remaining month.
Residential property tax will be repealed after the next election.
