“The Revenue Commissioners will not be valuing properties for LPT purposes except where there is a dispute about a valuation provided by a taxpayer, which, because of the banding system, is expected to be in a minority of cases.” Minister for Finance, Michael Noonan responding to questions in the Dail this week
The new “Local Property Tax” as Minister for Finance Michael Noonan calls it, or “Bondholders and Bankers’ Bailout Tax” as Deputies Richard Boyd Barrett and Joe Higgins unsuccessfully tried to have it amended to, during the Dail debate in December, is set to dominate headlines for the next year. Even speculation on detail of the tax is enough to garner front page splash headlines, like the Independent recently claiming that the Revenue Commissioners would be initiating valuations by informing house-owners of its opinion and leaving it to the householder to challenge.
This week in the Dail, we learned from Minister Noonan that the Revenue Commissioners – Irish tax authorities for our international audience – would not be originating valuations. That’s your job. The Minister says “Revenue is, however, actively preparing valuation guidance and developing tools to assist liable persons in assessing the value of their property which will be made available as soon as possible. Where these guidelines are used honestly, the property valuation will not be challenged by Revenue in accordance with its normal Customer Service Charter. The guidelines will include drawing property owner’s attention to the publicly available property price register which includes some 62,000 of reasonably recent property prices, and a method to help property owners establish average/indicative values for properties in different locations.“
We also learn that Government politicians are going to be promoting the “local” element in “local property tax”. When the tax was announced in December 2012, Minister Noonan said he was considering “ring fencing” the tax so that all property tax would be spent locally. He has now confirmed that it is his intention to ringfence property tax for local use – in a response to a question from Fianna Fail’s public expenditure and reform spokesperson Sean Fleming yesterday, Minister Noonan said “The intention is that the full amount of the tax will be spent where it is collected. It is a major reform in local government that those who pay most will have funding for the most services. In addition, from 2015, local councillors will have discretion to increase or reduce the rate of the tax by up to 15%. That will give real power to councilors”
The full text of the above question from Deputy Fleming is not yet available. These are the two parliamentary questions from Sinn Fein’s arts, sports and tourism and health spokespersons Sandra McLellan and Caoimhghin O’Caolain.
Deputy Sandra McLellan: To ask the Minister for Finance the methodology and process that will be used by the Revenue Commissioners in the assessment of the property tax on private homes, local authority properties and those owned by approved housing associations..
Deputy Caoimhghín Ó Caoláin: To ask the Minister for Finance if he will provide an update on the discussions between his Department and the Revenue Commissioners on the detail of the valuation and collection of the property tax.
Minister for Finance, Michael Noonan: I propose taking Questions Numbers 18 and 37 together.
My Department is in regular contact with the Revenue Commissioners with regard to the implementation of this tax through the Interdepartmental Group which was set up to oversee the introduction of Local Property Tax (LPT) and through bilateral discussions with Revenue.
The legislation governing the Local Property Tax is contained in Finance (Local Property Tax) Act 2012 and was signed into law by the President on 26 December 2012. The Act sets out how the tax is to be administered and also provides how a residential property is to be valued for LPT purposes, and I set out at some length in a reply to a series of questions yesterday how various aspects of the tax will be administered.
I am informed by the Revenue Commissioners that LPT is a self-assessment tax so in the first instance it is a matter for the property owner to calculate the tax due based on his or her assessment of the chargeable value of the property. The Revenue Commissioners will not be valuing properties for LPT purposes except where there is a dispute about a valuation provided by a taxpayer, which, because of the banding system, is expected to be in a minority of cases.
Revenue is, however, actively preparing valuation guidance and developing tools to assist liable persons in assessing the value of their property which will be made available as soon as possible. Where these guidelines are used honestly, the property valuation will not be challenged by Revenue in accordance with its normal Customer Service Charter. The guidelines will include drawing property owner’s attention to the publicly available property price register which includes some 62,000 of reasonably recent property prices, and a method to help property owners establish average/indicative values for properties in different locations.
For 2013, the charge to LPT is based on the market value of the property on 1 May 2013. In addition, in order to provide necessary certainty, this initial valuation of the property on 1 May 2013 will be the value of the property for the purposes of calculating the LPT charge for all years up to and including 2016. This value will hold regardless of improvements, extensions etc. to the property in question. Likewise, where a property is sold during this period, and the value of the property has increased substantially, there is no additional liability to LPT, once the initial valuation has been given honestly and fairly.
I am advised by Revenue that beginning in March 2013, they will be issuing property owners an LPT tax return, an information booklet and a Revenue Estimate of LPT. Having established the market value of their property, property owners are obliged to complete the LPT return in which they calculate the amount of tax they owe and state how they will pay the LPT due from a range of options. For 2013, the LPT return, if completed in paper form, must be submitted to Revenue by 7 May 2013, whereas, if they complete the form online, it must be submitted by 28 May 2013.
I am also informed that the payment options available to the property owner include payment in full using a debit or credit card, a single debit authority to deduct from a nominated bank or by way of cash payment to certain service providers. Alternatively, phased payments can be made by the property owner using direct debit, cash payments or by deduction at source from employment or occupational pension income or from certain payments from the Department of Social Protection and the Department of Agriculture, Food and the Marine.
Where a property owner fails to submit his/her LPT return by the relevant due date, the legislation provides that Revenue can enforce collection of an estimated amount of LPT. The Revenue Commissioners advise that this Revenue Estimate of LPT is not a valuation of their property nor should it be regarded as an accurate calculation of the amount of LPT that they should pay. Once property owners meet their obligations by valuing their property, submitting their return and advising Revenue of their payment preference within the relevant time limits, the Revenue Estimate of LPT notified to them is no longer relevant.
In general, the Finance (Local Property Tax) Act 2012 provides that local authorities are liable for the tax in the same way as any other residential property owner unless the properties are used to accommodate people with special housing needs. An approved housing association will be similarly liable for LPT on any residential properties that they own unless these properties are used to accommodate people with special housing needs, provided the housing association operates as a charity and has been granted an exemption for tax purposes by Revenue. I am further informed by the Revenue Commissioners that they are currently liaising with the Department of the Environment, Community and Local Government and with the voluntary social housing sector to establish how local authorities and voluntary housing organisations, respectively, will notify any LPT liability that they have to Revenue and how they will pay the amount due.