Dáil Éireann Debate, Thursday - 17 January 2013
4. Deputy Sean Fleming asked the Minister for Finance if he is satisfied that necessary logistical preparations will be completed in time for the scheduled introduction of the local property tax; if he is considering any amendments to the provisions of the tax prior to its commencement; and if he will make a statement on the matter. [2064/13]
Amharc ar fhreagraI am advised by the Revenue Commissioners that significant progress has been made with regard to their preparations for introducing local property tax. The legislation governing local property tax is contained in the Finance (Local Property Tax) Act 2012 which was signed into law by the President on 26 December 2012.
The Revenue Commissioners have already had extensive contacts with a wide range of Departments and agencies through the interdepartmental group which was set up to oversee the introduction of local property tax. They advise they are getting good co-operation from all parties. For example, significant progress has already been made with the Departments of Social Protection and of Agriculture, Food and the Marine, to ensure that the deduction at source option from certain payments administered by the Departments will be available to property-owners.
In addition, detailed discussions have already taken place with a number of other private sector stakeholders such as service-providers for cash payments, payroll administrators and payroll software specialists, regarding the implementation of a deduction at source option. I am informed that there is a clear, shared understanding of the requirements involved and that they are all actively working to meet agreed timelines. A key element of the design of the tax is that property-owners will have as much flexibility as possible to spread the payment of tax in equal instalments throughout the year. This is the reason the facility to deduct the tax at source is of such importance.
Regarding the resources required by Revenue, I previously advised the House in my reply to Question No. 57388/12, that the Revenue Commissioners would be resourced to ensure the successful implementation of the tax. The additional resources required for 2013 are noted in the Department of Public Expenditure and Reform expenditure report 2013. The employment control framework includes 100 additional posts approved by my colleague the Minister for Public Expenditure and Reform, in the context of the introduction of LPT. The Revenue Commissioners further advise that they have established the nucleus of the local property tax branch in Ennis, where staff are likely to become available for redeployment in the context of the Government's policy on shared services, specifically in the areas of payroll, banking and financial management. The Revenue Commissioners are deploying additional staff to this branch by reconfiguring their district structure in the south west and by relocating functions from Clare to Limerick. I am satisfied that if the Revenue receives the additional 100 staff which were sanctioned in 2013, it will be in a position to prioritise its resources to ensure the successful implementation of LPT. In addition, Revenue is contracting for external service delivery of some data capture and call centre services.
I am also informed by Revenue that substantial progress has been made on the development of the IT systems for administering and collecting LPT and its incorporation into Revenue’s existing IT infrastructure. A key aspect of the work being undertaken by Revenue is the compilation of a comprehensive register of residential properties in the State which will be used to correspond with all property-owners and will be ready in time for a general issue of LPT returns to property-owners in March next.
Additional information not given on the floor of the House
This register is being developed using data drawn from a range of sources including Revenue’s own databases, the Local Government Management Agency database as well as data from utility companies. The use of multiple databases does, however, bring the risk of duplication and the Commissioners are working to lessen this risk. Local property tax is a self-assessment tax. Revenue is actively preparing valuation guidance and developing tools to assist liable persons in assessing the value of their property which will be made available as soon as possible. Beginning in March 2013, the Revenue Commissioners will be issuing an LPT tax return to all property owners together with an information booklet. Property owners will have the option of completing and submitting their LPT return in paper or by electronic means. I am advised that the development of the paper LPT return form and an on-line system for completing and submitting LPT returns are well advanced. Similarly, I am assured that all the processes and procedures required to handle the completed LPT return forms from property owners by the relevant due dates of 7 May 2013 for paper forms, and 28 May for on-line forms, will be in place. The general issue of returns will also include a Revenue estimate of LPT. This Revenue estimate is not based on a valuation of the individual property, but is an amount of tax which will be collected in the event that the liable person does not submit a return. If the estimate is paid the person is still obliged to submit the return.
On the communications front, extensive frequently asked questions have already been made available by Revenue in the context of the budget and the Finance (Local Property Tax) Act. Closer to the general issue, Revenue will engage in a public communications campaign. In particular, Revenue will provide detailed guidance on how the tax will operate and the obligations for owners of residential properties. There is no doubt that introducing a new tax regime for residential property in a such a tight timeframe is a significant challenge for the Revenue Commissioners along with all of their other responsibilities, but I am fully satisfied that they will meet the challenge involved and deliver all of the necessary milestones prior to the commencement of the new regime on 1 July 2013.
The scale of the logistical preparations for this tax is significant. One reason for enacting the Finance (Local Property Tax) Act in December last was to provide the basis for the development of the systems which I have outlined above. A small number of amendments, which will not impair the delivery of the project, are under consideration, including, as I indicated on Second Stage of the Finance (Local Property Tax) Bill 2012 last December, that certain residential properties that have suffered damage due to pyrite, to be prescribed by the Minister for the Environment, Community and Local Government, would be catered for.
The Minister has provided detailed and specific information on the arrangements. I ask if he can say why the Revenue Commissioners intend to use call centres on a contract basis to help with this work. Will people be asked for their telephone numbers in order to receive phone calls? The private sector will need to amend its payroll systems in mid-year to take account of this payment. Will this result in a cost to the private sector employers? It can take up to eight weeks to arrange for deduction at source for social welfare recipients who wish to pay council rent. The timescale will be very tight.
The big issue was alluded to by his colleague, Deputy Olivia Mitchell. She said that if people in Dublin realise they are paying five times more than people in Donegal for the same service they will just stop paying it. Deputy Dowds of the Labour Party said he wants at least 80% of the funds collected in Dublin to be retained in Dublin. He said the majority of houses in Donegal sold last year were sold for less than €100,000. Both Fine Gael and the Labour Party seem to be picking on Donegal with its low valuations. They resent the fact that people in some counties will have a lower rate because their houses are valued at a lower value. This is an anti-Dublin tax, an anti-urban area tax. The Minister's party colleagues are clearly reflecting that issue. Will the Minister consider some amendments along those lines to the Bill?
The Government decided to have one standard rate of tax for the country as a whole, based on the value of houses. At present, as the Deputy will be aware, some of the funding for local government comes from motor taxation. The incidence of motor taxation falls heavily on the Dublin area and on the main urban centres also. The difference here is that unlike motor tax, which goes into a fund which is allocated around the country, it is the intention that arrangements will be made between the Minister for Public Expenditure and Reform and the Minister for the Environment, Community and Local Government, to ensure that the tax is spent where it is collected. It will take some time to get to the figure quoted by the Deputy.
The intention is that the full amount of the tax will be spent where it is collected. It is a major reform in local government that those who pay most will have funding for the most services. In addition, from 2015, local councillors will have discretion to increase or reduce the rate of the tax by up to 15%. That will give real power to councillors. Future Governments may decide to give more discretion in that regard but, in accordance with the Act, full discretion amounts to plus or minus 15% at present.
With regard to the other issues raised, the Office of the Revenue Commissioners realises this matter is quite complex. It wants as much assistance as possible for taxpayers so it will be operating a significant number of helplines. It will be necessary for employers who deduct the tax at source to change their payment systems, but this is no different from what they must do if VAT, personal taxes, PRSI or the universal social charge are changed on any budget night. The Office of the Revenue Commissioners has never paid for this facility. Employers are obliged to collect taxes and pass them on to the Revenue Commissioners. There is no question of agency payments being available for these facilities. The Minister for Social Protection has already made or is making arrangements within her Department so there will be an easy payment facility available through the social welfare system, if desired. The payment date is 1 July, which is a long way down the road.
I am concerned that all the money collected will ultimately go to the county concerned. People are entitled to equal treatment regarding services. What the Minister is saying is almost like saying that if there are more people in Dublin, they will have more hospital and medical services. All counties should be treated equally regardless of where tax is collected.
Deputy Stephen Donnelly is unavailable and sought my permission to allow Deputy Boyd Barrett to ask his question, No. 5, in his stead.
