Saturday 3 December 2016

Noonan rules out any hikes to property tax before next election

Public to avoid major hikes as freeze to extend 'until 2019' as Minister receives expert report

Published 23/08/2015 | 02:30

Michael Noonan
Michael Noonan

Finance Minister Michael Noonan has ruled out any long-term decisions on the future of the controversial property tax before the General Election.

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Mr Noonan has signalled to his top officials within the Department of Finance that it "will be a matter for the next administration" to decide on future rates to be levied on homeowners.

The news comes as it has been confirmed that Mr Noonan and his senior officials have received the expert report from Dr Don Thornhill into what options are available in terms of reforming the tax.

Mr Noonan has ruled out any "sharp hikes" in the property tax once the current charge period ends next year.

Because of significant home price increases since 2013, when the tax was first introduced, homeowners would be facing drastic tax increases if the system was left unchanged.

But Mr Noonan, who is still on his holidays, is to confer with his officials about the findings of the Thornhill Report on his return. However, he has made it clear that he will not be making any decisions on the long-term future of the property tax.

Speaking to the Sunday Independent, a senior Government source said: "Basically it will be a matter for the next administration in terms of what you would do with it. The minister has made his intentions clear, the time-frame is also clear as reported, 2019.

"There are other recommendations in the Thornhill report which will be considered in the context of the Budget."

The source added: "They are more to do with the operational administration of the scheme, as opposed to their impact on homeowners".

"The only thing that will impact on individual homeowners will be the time-frame," the source said.

"Thornhill considered and looked at a whole range of different options as to maintain the tax, maintain the sustainability and credibility of the tax into the long term.

"Any of the things that will be considered won't be introduced until post the freeze anyway."

It is believed that Dr Thornhill is to present a menu of options that will be considered by Mr Noonan's successor and senior finance officials in due course.

"You want to maintain the tax and its credibility. Over time, what you don't want is for it to wither on the vine because you end up in a position where you are so heavily reliant on income tax," the source said.

The Sunday Independent understands that the Thornhill report outlines a number of options on changing the levy, such as staggered increases over a three-year period.

It is understood that while the report does not favour any specific way to deal with changes to the tax, Mr Noonan is likely to freeze the amount paid by homeowners until 2019.

Mr Noonan has said he will not allow for any steep rises in the property tax and will announce specific proposals in October's budget.

The rate of property tax paid by homeowners from 2013 to 2016 was based on how houses were valued on May 1st, 2013, with a revaluation due in November 2016.

Government backbench TDs have raised concerns that rising property prices in Dublin in the past number of years could lead to significant increases in the tax.

The property tax payable by homeowners is based on the value of the home and rises in bands, with the first band up to €100,000 and rising every €50,000 thereafter.

Mr Noonan commissioned Dr Thornhill, a former public servant, to conduct a review of the tax. Sources said Dr Thornhill outlined a number of possible changes and outlined the positives and negatives of each but did not make specific recommendations.

His suggestions included: taking the average valuation between 2013 and 2016 and using that as the basis for a new level of property tax; having a staggered increase over a three-year period after 2016, although this is seen as impractical; widening the bands from €50,000 to €100,000 in an attempt to limit the property tax increase for homeowners and limiting the number of bands a homeowner could jump to two.

Dr Thornhill also proposed a two-year freeze on valuations until 2018, the favoured option of Mr Noonan, who also considered a freeze before last year's Budget.

Sources said Mr Noonan's reason for choosing to freeze the tax at 2013 levels was to allow the tax to bed in with the public.

Any future reforms of the tax will have to be dealt with at that stage.

Sunday Independent

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