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Commissioner Defends Irish LPT System

by Jason Gorringe, Tax-News.com, London

12 November 2013


Irish homeowners do not have to pay the local property tax before January 1, 2014, unless they choose to do so, the Revenue Commissioner has clarified.

Addressing parliament's Joint Committee on Finance, Public Expenditure and Reform, Josephine Feehily said that her Department has offered "the widest range of payment options that we could for customers."

Property owners are able to choose from seven different payment alternatives. 24 percent of the total LPT revenue collected to date has been generated via a single debit system, while 36.7 percent of people have opted to pay with a debit card.

The Revenue Department recently began writing to the approximately 988,000 residential property owners who paid their 2013 LPT bill in one lump sum, to inform them that they must now complete a payment instruction for 2014. Concerns were raised that the Department's regulations will mean that those who decide to pay the 2014 tax by credit or debit card, or by cheque, will need to pay the amount in full, upfront, and by the end of November.

Feehily told lawmakers that "unless filing is completed in November, Revenue could not offer the options of phased payments over 12 months or 52 weeks, because these need to be set up and instructions have to issue to the employer in time."

Attempting to redress any further misgivings, Feehily explained that "the payment options operate in exactly the same way as they did earlier this year. Generally speaking, with one exception to which I will return, people seemed to understand them well and use them, if not happily – because paying any tax is unlikely to generate happiness – but without difficulty.

"I would like to emphasise to the Committee that the issues which it is suggested are causing confusion and concern to taxpayers hardly arose at all in calls to our LPT helpline in the months in April and May this year. We had no advance warning from the last campaign that these apparent misunderstandings might have existed."

Returns have now been made in respect of over 200,000 properties, equivalent to a 35 percent compliance rate at this stage.

Labor TD Brendan Ryan, who called Feehily before the committee, has urged the Government to examine the viability of introducing a tax credit for those who pay a property management fee. He suggested that the Finance Minister "look into the situation whereby people, predominantly apartment dwellers, who bought homes during the boom years and pay hefty annual management fees are also subject to the local property tax.

"There are many people in Fingal and throughout Ireland who pay Celtic Tiger mortgages on properties in negative equity and are now due to pay both the Local Property Tax and their management fees. The month of January, for people living in Apartments or managed estates can be a month of extra financial hardship as the bill for management fees can range anywhere from EUR800 [USD1,070] to over EUR1,000.

"At a time when almost everybody is tightening their belts after Christmas and planning their annual household budgets, apartment dwellers and those in managed estates, have the extra bill of management fees to cope with."

TAGS: compliance | Finance | tax | tax compliance | Ireland | property tax | tax incentives | revenue guidance | law | budget | fees | ministry of finance | tax authority | tax planning | tax rates | revenue statistics | tax reform | regulation | Tax

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