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Finance (Local Property Tax) Bill 2012: Second Stage (Continued)

Friday, 14 December 2012

Dáil Éireann Debate
Vol. 786 No. 4

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(Speaker Continuing)

[Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan] Liable persons can choose from a variety of payment arrangements, including paying the tax directly or having it deducted at source from salary or State payments. Deduction at source will be the default method of payment if another method is not chosen. Owner-occupiers with incomes below specified limits will be able to defer payment of the tax. Amounts deferred under these provisions will, however, remain a charge on the property.

Before going through the main elements of the Bill, I will discuss briefly why the market value of properties was chosen as the basis of assessment. The Thornhill group did consider other possibilities, such as site or land value, floor area, and a combination or matrix of other possibilities. These other options were rejected on the basis that market value was the most easily understood and ascertainable concept, and one which best reflected the rationale for the tax. The site value option can lead to serious inequalities with the same rate being applied to two very different properties on similar sites. Also, its international use is very low due to the high level of litigation associated with its usage. The market value of a property will reflect its proximity to services and amenities, which is why such values are usually higher in urban areas than rural areas. The local adjustment factor, which I will outline in more detail, will give local authorities the power to vary the amount of tax they collect so as to better align the tax to local needs.

Part 1 which comprises sections 1 and 2 contains the Short Title, commencement provisions and interpretation sections.

Part 2, comprising sections 3 to 10, provides for definitions of "relevant residential property", on which the tax will be chargeable and that certain properties will be regarded as not relevant residential properties and, therefore, exempt from the tax. These include properties fully subject to municipal rates; properties which have been vacated by the owner for at least 12 months due to mental or physical infirmity, certified by a registered medical practitioner; properties which have been vacated by the owner for less than 12 months, where a registered medical practitioner is satisfied that the owner is unlikely at any stage to resume occupation of the property and where the property remains unoccupied; registered nursing homes; newly constructed but unsold and unoccupied residential property; properties, the ownership of which is vested in a public body or an approved charitable body and which are used to provide accommodation to people with special housing needs such as the elderly or people with disabilities; property purchased by a first-time buyer as a sole or main residence between 1 January 2013 and 31 December 2013. These will be exempt until the end of 2016; new and previously unused properties that are purchased from a builder or developer between 1 January 2013 and the end of 2016, will also be exempt until the end of 2016; and, properties in certain unfinished developments, or 'ghost estates', as prescribed by law by the Minister for the Environment, Community and Local Government.

The Government is conscious of the very real costs and difficulties faced by people whose homes have been affected by pyrite. My colleague, the Minister for the Environment, Community and local Government has indicated that he considers that houses demonstrated to be subject to a certifiable level of pyritic heave should receive a waiver from the local property tax. I propose to address this issue in the context of the Finance Bill. In addition, the tax will not be charged on mobile homes, vessels or vehicles. If one lives in a yacht one will not pay property tax.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath That is very good.

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan Part 3, made up of sections 11 and 12, contains the rules regarding liable persons. In general, the liable person will be the person who is the owner of the property. A person with a leasehold interest is liable if the term of the lease can equal or exceed 20 years or where a person has a life interest in the property. In the case of property held under trust, the trustees and beneficiaries are jointly and severally liable for the tax. Where the property is occupied rent-free on a long-term basis but there is no proof of ownership or documentation establishing the interest that the occupier holds in the property, the occupier may be regarded as the liable person.

Part 4, comprising sections 13 to 21, contains the charging provisions of the Local Property Tax Bill. The first valuation date will be 1 May 2013 and the valuation on this date will be valid from 2013 to 2016 inclusive. Thereafter, the valuation date that will apply will be 1 November in the year preceding each three year period so the valuation date for the period 2017 to 2019 will be 1 November 2016. Where the liable person changes between valuation dates - that is, where the property changes hands - the chargeable value will continue to apply to the new liable person.

Section 15 provides that where a liable person makes a self-assessed valuation in accordance with guidelines issued by the Revenue Commissioners and pays the annual amount of tax due, the Revenue Commissioners will not seek to replace this self-assessment with a Revenue assessment. This provision will not apply where the chargeable value of a property exceeds €1 million.

Section 16 contains the charging provisions for local property tax. The tax will be introduced in 2013 and will be payable by the liable person. Joint owners will be jointly and severally liable for the payment of the tax. The Revenue Commissioners may pursue one of the joint owners for the full liability. Payment by that person discharges the debt to the Revenue Commissioners of all of the jointly liable persons.

Section 17 sets out the methodology for calculating the local property tax payable for a residential property. The section contains a table with an initial valuation band of €0 to €100,000 plus 18 valuation bands of €50,000 from €100,000 to €1 million and the respective mid-point for each valuation band. A rate of 0.18% is applied to the mid-point of a valuation band to determine the tax payable. If the market value of a residential property exceeds €1 million, a rate of 0.18% applies to the chargeable value up to €1 million and a rate of 0.25% applies to the remainder of the chargeable value over €1 million, with no banding applied. As I stated on budget night, the rates of local property tax will not be changed for the lifetime of this Government. The tax payable in 2013 will be half the full year rate.

Section 20 enables local authorities to increase or decrease the rate of local property tax by a local adjustment factor which cannot exceed 15% above or below the national central rate. The extent of this variation will solely be a matter for the relevant local authority. However, the Minister for the Environment, Community and Local Government may make regulations regarding the setting of the local adjustment factor. Such regulations could cover matters to which local authorities should have regard when setting a local adjustment factor, public consultation procedures and other procedural matters deemed necessary by the Minister.

Part 5, which comprises sections 22 to 26, contains the standard care and management provisions for Revenue, including the four-year time limit on repayments, delegation of functions to authorised officers and allowing for electronic means of return. Part 6, covering sections 27 to 32, deals with the register of properties to be maintained by Revenue, including the obligation of liable persons to register with the Revenue Commissioners by making a return.

Part 7, made up of sections 33 to 46, relates to the making of returns of local property tax to the Revenue Commissioners. As indicated, the Bill provides for a self-assessment system and allows for electronic submission of returns by owners of multiple properties and for submission of returns by agents and lessees. This Part also provides that a failure to submit a local property tax return will lead to surcharges for late submission of income tax and corporation tax returns.

Part 8, comprising sections 47 to 60, deals with Revenue estimates and assessments. Revenue will make an estimate of the amount of local property tax due in respect of a property and will notify the liable person. Revenue may amend this assessment if it subsequently considers it to be excessive or insufficient. If a liable person does not submit a local property tax return containing a self-assessment of the local property tax payable, the Revenue estimate will become due and payable. Revenue assessments will be subject to the normal appeal procedures.

Part 9, comprised of sections 61 to 63, contains the usual appeal procedures for taxes under the care and management of the Revenue Commissioners.

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