Thursday, 26 September 2019

Ceisteanna (23)

Richard Boyd Barrett

Ceist:

23. Deputy Richard Boyd Barrett asked the Minister for Finance if the local property tax will be abolished and replaced with a landlord's tax that increases in rate depending on the number of properties the landlord has; and if he will make a statement on the matter. [38986/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The Local Property Tax was introduced in 2013 to provide a stable and sustainable funding base for local authorities and is a significant base-broadening measure. LPT has yielded over €2.42 billion for local authorities since its introduction, with the annual LPT allocation currently standing at close to €465 million, which supplements other local authority income. The Local Property Tax is currently forecast to yield approximately €470 million this year.

The taxation of property through a recurring annual tax is less economically distortionary than tax imposed on either income or capital. This is supported by analysis and international experience where, for example, the OECD in 2011 suggested that tax on property is considered the least harmful to growth. It is also the International and European norm. At just 0.6% of national income, the LPT yield in Ireland is low when compared to rates of 2.8% in France and over 3% in the United Kingdom.

I am informed by Revenue that LPT returns require owners to indicate whether their properties are principal or non-principal primary residences (NPPR). However, the information does not distinguish whether NPPR properties are owned by commercial landlords or otherwise. Page 27 of the Revenue Ready Reckoner which is available online shows the effect of additional charges on NPPR properties. If Principal Private Residences were exempted from the tax as the Deputy seems to suggest, approximately €410 million currently collected under the LPT would be lost. The number of properties indicated as NPPRs, is  approximately 260,000 and, consequently, for the Deputy’s suggested replacement tax, a very high tax rate would have to be imposed on these properties in order to maintain the current yield.

Last April, the Report of the Inter-Departmental Review Group was published and, having considered the findings of the review report, I decided to defer valuation date from 1st November 2019 to 1st November 2020. This deferral gives sufficient time to build consensus about the best way forward for the tax and to prepare appropriate legislation.  Therefore, I have no plans to abolish the Local Property Tax.