LPT : Local Property Tax: Full text of Budget announcement

Brendan Burgess

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Local Property Tax

I will now turn to the Local Property Tax, which the Government is introducing as a better alternative to increased taxes on income. Property taxes are used across the world as they are better for the protection and creation of jobs than taxes that increase the cost of employment.
The Local Property Tax will commence with effect from the 1st of July 2013 for the second half of the year. In order to design a tax that is equitable, the Government has accepted most of the recommendations made in the Report of the Expert Group chaired by Dr. Don Thornhill. The Report is being published this week. The main features of the tax are as follows:

  • It will be collected by the Revenue Commissioners
  • Owners of residential properties, including rental properties, will be responsible for payment of the tax.
  • The tax will be payable on the basis of the market value of the property as assessed by the owner. To aid owners, the Revenue Commissioners will provide valuation guidance to which owners can refer. Alternatively, owners will be free to use a competent valuer. The initial valuation will be valid up to and including 2016, which will provide three and a half years of certainty for property owners.
  • The rate of the tax will be 0.18 per cent of market value up to €1 million and 0.25 per cent on values above that level. These central national rates will not be varied during the lifetime of this Government.
  • Properties with a value of more than €100,000 and less than €1 million will be assessed at the mid-point of valuation band of €50,000 width - for example, properties valued between €150,001 and €200,000 will be assessed at 0.18 per cent of €175,000. Properties below €100,000 will be assessed at 0.18 per cent of €50,000.
  • Properties valued over €1 million will be liable at 0.18 per cent on the first €1 million and at 0.25 per cent on the balance, with no banding applied.
  • Property owners will be able to choose from a wide range of payment options including payment by direct debit; credit or debit cards, cash payments or “deduction at source” from salary/occupational pension or certain State payments.
  • Certain properties will be exempt from assessment. These exemptions largely correspond to exemptions from the Household Charge.
  • In order to assist those facing difficult circumstances, there will be a system of voluntary deferral arrangements that I will set out shortly.
This Government is committed to real local Government democracy and accountability. Therefore, from 2015, local authorities will have the power to vary the rates by 15 per cent above or below the central national rates to better match their funding needs. In this way the property tax will strongly reinforce local democratic decision-making and encourage greater efficiency by authorities on behalf of their electorates.


As I stated earlier, there will be a half year’s property tax charge in 2013. Using the example of properties in the €150,000 to €200,000 band, the charge in 2013 will be a half year charge of €157. It is important to note that this represents an increase for the year of no more than €57 on the household charge payable in 2012..


I have already set out certain exemptions from the Local Property Tax that will apply to first-time purchasers of homes in 2013 and to purchasers of new or previously unoccupied homes up to the end of 2016.


A voluntary deferral will be available to liable persons whose gross income limits do not exceed €15,000 for a single person and €25,000 for a couple. A deferral option will also be available up to the end of 2017 where gross income less 80 per cent of mortgage interest falls below €15,000 for single people and €25,000 for a couple. Marginal relief will apply where the income or adjusted income is €10,000 above the income limit, to permit deferrals of up to 50 per cent of liability. Interest will be charged on deferred amounts at 4 per cent simple interest per annum, which is half the rate charged in default cases. Deferred property taxes and interest will have to be discharged on the sale/transfer of the property.



The Household Charge will cease with effect from the 1st of January 2013 and the NPPR Charge or “second homes charge” will cease with effect from the 1st of January 2014.
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Full details of the Local Property Tax will be set out in the Finance Local Property Tax Bill 2012 which will be published this week and commence second stage in the Dáíl next week. Extensive information is available on the Budget and Revenue Commissioners website and from the Revenue Commissioners helpline.



I view tax compliance as a core principle of our democracy. Public services can only be provided to citizens because people pay their taxes. I want to reassure the vast majority of tax compliant citizens that the Revenue Commissioners will strictly enforce the Local Property Tax and they will collect any unpaid Household Charge for 2012. Any arrears that are not discharged before the 1st of July 2013 will be increased to €200 and will be collected through the Local Property Tax system.



The Local Property Tax is fair and progressive as all property owners make a contribution but those who own the most valuable properties will pay the most.
 
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