Dáil Éireann Debate, Thursday - 21 October 2021
177. Deputy Emer Higgins asked the Minister for Finance his views on reviewing the local property tax liability to make those in receipt of the old age pension exempt from paying local property tax due to their reduced income and financial inability to pay; and if he will make a statement on the matter. [51754/21]
Amharc ar fhreagraThe 2012 report of the Interdepartmental Group on the Design of a Property Tax considered the issue of introducing an exemption or waiver for property owners below a certain income threshold. Having considered the possible inequities and administrative challenges of such an exemption or waiver structure the group recommended instead a deferral scheme that would assist property owners in a number of different scenarios including low income. The interdepartmental group recommended that where taxpayers are entitled to, and have elected for, deferral of LPT, interest due on deferred payments should be at a lower rate to the rate charged on overdue LPT which is 8% per annum. The Government accepted these recommendations.
The Finance (Local Property Tax) Act 2012 (as amended) accordingly includes arrangements whereby a person may opt to defer, or partially defer, payment of the tax if certain conditions are met. Any LPT that is deferred between 2013 and 2021 carries an interest charge of 4% per annum. Interest will accrue on the deferred amount until such time that it is paid off. In providing for the possibility of deferral of the tax, the reduced rate of interest recognises that the circumstances in which a person defers the tax charge are very different from those where the property owner simply fails to pay the tax.
The 2019 Interdepartmental LPT Review Group recommended that the income thresholds for LPT deferrals should be reviewed regularly by reference to (i) movements in the CPI, (ii) wage growth in the economy, and (iii) changes in fixed income payments by the State. The Finance (Local Property Tax) (Amendment) Act 2021 provides that from the next valuation date of 1 November 2021, the deferral thresholds will increase to €18,000 for a single owner and €30,000 for a couple. This is an increase of 20% in these thresholds.
A review of the interest rate on deferred LPT also took place this year, in advance of the next LPT valuation period (i.e. 2022 to 2025). The review took account of the Covid initiative on the warehousing of tax debts, in respect of which a reduced interest rate of 3% applies for late payment of outstanding liabilities. In the interests of consistency and fairness, the Government decided to reduce the LPT deferral rate to 3%. The 3% rate will apply to any LPT that is deferred on or after 1 January 2022. It will also apply to any LPT that was deferred between 2013 and 2021, to the extent that it is still outstanding in 2022.
Where a liable person does not qualify for or does not wish to avail of a deferral there are a wide number of phased payment options available to assist with budgeting. The various options are designed to provide the maximum possible flexibility for individual circumstances. Throughout the pandemic, Revenue has engaged extensively with individual taxpayers experiencing difficulties paying taxes 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 tax payment difficulties.
