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Former senior public servant Dr. Don Thornhill was asked by the government to review LPT.
This is a link to his review, dated July, 2015.
He makes 13 recommendations:
1: The exemption for residential properties purchased from builders/developers or unsold by them should not be renewed when the next revaluation takes place. Neither should the exemption for properties on unfinished housing estates and the exemption for ‘first-time buyers’.
2: The existing deferral provisions should be continued and be reviewed and revised at frequent intervals in line with movements in the CPI so as to maintain their real value.
3: The period of relief for income-stressed owner-occupiers who have outstanding mortgages should be extended beyond the end of 2017.
4: For owner-occupiers over 80 years of age or those with stated certified long term illnesses and disabilities who are also living alone, it is recommended that consideration be given to raising the eligible income limit for deferrals to €20,000.
5: It is recommended that the Revenue ‘estimate amount’ be treated, instead, as a ‘default’ self-assessment for LPT purposes. This approach is recommended on the understanding that it would be made clear to taxpayers that they would have an obligation to submit a return form if the Revenue “estimate amount” did not fall into the same valuation band as the liable persons self-assessment of the value of the property.
6: It is recommended in order to simplify the current Government accounting system that direct payment of LPT receipts should be made by Revenue to the Local Government Fund rather than the current more complicated system.
7: A revised system of assessing local property tax liabilities is proposed. A minimum yield which must be raised by each local authority would be set centrally by Government as part of the process for setting the national budget. The Department of Finance and Revenue, using the LPT tax base data and other relevant information, would estimate the property tax rates to be applied in each local authority area in order to raise this minimum yield. Local authorities on receipt of this information could adjust this rate upwards by a factor of up to 15 percent. It is envisaged that the minimum yield for LPT could be set with reference to the historic and current amounts raised in each local authority area so that property tax bills should remain at stable levels.
It would be desirable that the technical work entailed in developing and putting in place the processes entailed in this process should not be done in a compressed time scale. It will be necessary to align the new processes with the arrangements for the settlement of local authority budgets and the development and testing of the methodology for updating the value of the property tax bases in each local authority area. To achieve this it may be necessary to delay the next revaluation from November 2016 to November 2018 or November 2019. Any legislative changes to defer the valuation date should be accompanied by the legislative changes necessary to reform the system as outlined above.
Acceptance of this recommendation could be accompanied by a changeover to a five, rather than three, year valuation period. This would reduce the compliance requirements for tax payers and reduce administrative costs for Revenue. However, a five year cycle could also raise concerns among the public about “valuation shocks” as the new valuation dates approach. Consideration might be given as to weighing up the pros and cons of these two approaches.
8: Local authorities should be more engaged in supporting the Office of the Revenue Commissioners in the LPT process and also to provide the general public and individual households with programmatic and other useful information on how they spend the public funds available to them and the proportionate contribution made by the LPT.
9: Over the medium term, the Government should consider moving to a system whereby local authorities retain 100 percent of the LPT revenues raised in their areas. Authorities with weaker tax bases would consequently need to receive supplementary Exchequer funding.
10: In line with the retention of 100 percent of LPT revenues by individual local authorities, LPT should be re-designated as the Local Council Tax (LCT) to emphasise that it is a tax raised to pay for local council services.
11: regarding properties damaged by pyrite, it is recommended that the exemption continue in place but it be restricted to those properties that have been certified as having a damage rating of ‘2’ or ‘1 with progression’; that pyrite damage continue to be proved by inspection and testing by a competent person in accordance with a standard published by the National Standards Authority of Ireland (NSAI); where liable persons elect not to incur the costs of testing they have the option of submitting by way of self-assessment a value to Revenue for the property which in their view reflects its current market value; where the Pyrite Resolution Board (PRB) is prepared to remediate a property without carrying out laboratory testing, Revenue accept a confirmation of remediation from the PRB in lieu of the NSAI certificate: and, where a party such as a guarantee company or a builder/developer remediates a property or compensates the property owner in lieu of remediation, Revenue accept confirmation of this from the party in lieu of the NSAI certificate.
12: reliefs for properties occupied by persons with disabilities - The changes currently being administered by the Revenue under their care and management provisions should be covered by amending legislation, as, it is understood, is the Minister’s intention; Additionally, with regard to the relief by way of reduced chargeable value, increase the threshold to the lesser of the increase in chargeable value or €50,000 which would ensure everyone who meets the qualifying conditions could benefit from the relief by way of reduced chargeable value up to a maximum reduction of €90 (one bandwidth). The relief would still only apply where the adaptations increase the chargeable value of the property.
13: LPT payments should not be allowed as a deduction to landlords against income or corporation tax.
This is a link to his review, dated July, 2015.
He makes 13 recommendations:
1: The exemption for residential properties purchased from builders/developers or unsold by them should not be renewed when the next revaluation takes place. Neither should the exemption for properties on unfinished housing estates and the exemption for ‘first-time buyers’.
2: The existing deferral provisions should be continued and be reviewed and revised at frequent intervals in line with movements in the CPI so as to maintain their real value.
3: The period of relief for income-stressed owner-occupiers who have outstanding mortgages should be extended beyond the end of 2017.
4: For owner-occupiers over 80 years of age or those with stated certified long term illnesses and disabilities who are also living alone, it is recommended that consideration be given to raising the eligible income limit for deferrals to €20,000.
5: It is recommended that the Revenue ‘estimate amount’ be treated, instead, as a ‘default’ self-assessment for LPT purposes. This approach is recommended on the understanding that it would be made clear to taxpayers that they would have an obligation to submit a return form if the Revenue “estimate amount” did not fall into the same valuation band as the liable persons self-assessment of the value of the property.
6: It is recommended in order to simplify the current Government accounting system that direct payment of LPT receipts should be made by Revenue to the Local Government Fund rather than the current more complicated system.
7: A revised system of assessing local property tax liabilities is proposed. A minimum yield which must be raised by each local authority would be set centrally by Government as part of the process for setting the national budget. The Department of Finance and Revenue, using the LPT tax base data and other relevant information, would estimate the property tax rates to be applied in each local authority area in order to raise this minimum yield. Local authorities on receipt of this information could adjust this rate upwards by a factor of up to 15 percent. It is envisaged that the minimum yield for LPT could be set with reference to the historic and current amounts raised in each local authority area so that property tax bills should remain at stable levels.
It would be desirable that the technical work entailed in developing and putting in place the processes entailed in this process should not be done in a compressed time scale. It will be necessary to align the new processes with the arrangements for the settlement of local authority budgets and the development and testing of the methodology for updating the value of the property tax bases in each local authority area. To achieve this it may be necessary to delay the next revaluation from November 2016 to November 2018 or November 2019. Any legislative changes to defer the valuation date should be accompanied by the legislative changes necessary to reform the system as outlined above.
Acceptance of this recommendation could be accompanied by a changeover to a five, rather than three, year valuation period. This would reduce the compliance requirements for tax payers and reduce administrative costs for Revenue. However, a five year cycle could also raise concerns among the public about “valuation shocks” as the new valuation dates approach. Consideration might be given as to weighing up the pros and cons of these two approaches.
8: Local authorities should be more engaged in supporting the Office of the Revenue Commissioners in the LPT process and also to provide the general public and individual households with programmatic and other useful information on how they spend the public funds available to them and the proportionate contribution made by the LPT.
9: Over the medium term, the Government should consider moving to a system whereby local authorities retain 100 percent of the LPT revenues raised in their areas. Authorities with weaker tax bases would consequently need to receive supplementary Exchequer funding.
10: In line with the retention of 100 percent of LPT revenues by individual local authorities, LPT should be re-designated as the Local Council Tax (LCT) to emphasise that it is a tax raised to pay for local council services.
11: regarding properties damaged by pyrite, it is recommended that the exemption continue in place but it be restricted to those properties that have been certified as having a damage rating of ‘2’ or ‘1 with progression’; that pyrite damage continue to be proved by inspection and testing by a competent person in accordance with a standard published by the National Standards Authority of Ireland (NSAI); where liable persons elect not to incur the costs of testing they have the option of submitting by way of self-assessment a value to Revenue for the property which in their view reflects its current market value; where the Pyrite Resolution Board (PRB) is prepared to remediate a property without carrying out laboratory testing, Revenue accept a confirmation of remediation from the PRB in lieu of the NSAI certificate: and, where a party such as a guarantee company or a builder/developer remediates a property or compensates the property owner in lieu of remediation, Revenue accept confirmation of this from the party in lieu of the NSAI certificate.
12: reliefs for properties occupied by persons with disabilities - The changes currently being administered by the Revenue under their care and management provisions should be covered by amending legislation, as, it is understood, is the Minister’s intention; Additionally, with regard to the relief by way of reduced chargeable value, increase the threshold to the lesser of the increase in chargeable value or €50,000 which would ensure everyone who meets the qualifying conditions could benefit from the relief by way of reduced chargeable value up to a maximum reduction of €90 (one bandwidth). The relief would still only apply where the adaptations increase the chargeable value of the property.
13: LPT payments should not be allowed as a deduction to landlords against income or corporation tax.