Cost of Property Tax Debacle

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Economy, Oral Questions

In a recent question put by Clare Daly in the Dáil  Minister Noonan revealed the extent of the costs involved in sending out 988,000 letters to property owners in October 2013.

To ask the Minister for Finance the full costs of the implementation of the property tax to date, with particular reference to the cost of reissuing the latest letter seeking payment; the amount that has been paid to contractor providers; the number of staff of these providers that are working full time for Revenue and the cost of same; and the cost of the operation of the website and any other payments.

Clare Daly.
For ORAL answer on Wednesday, 20th November, 2013.
Ref No: 49077/13

REPLY

Minister for Finance (Mr Noonan) : I am advised by the Revenue Commissioners that the introduction of the Local Property Tax (LPT) amounts to the largest ever extension of the self-assessment system and represents a significant administrative challenge. The Expenditure Report for 2013, which was published by the Department of Public Expenditure and Reform in December last, makes a provision of €25.9m in 2013 for the implementation of LPT.

I am advised by the Revenue Commissioners that the total costs incurred in establishing Local Property Tax to the end of October 2013 is €24.29m, of which €21.98m was incurred in 2013. Also by the end of October, over 1.6 million LPT Returns had been filed for 2013 and approximately €215m had been transferred by Revenue to the Exchequer. I understand from Revenue that over 500,000 returns have now been filed in respect of 2014.

The Deputy asked about “the cost of reissuing the latest letter seeking payment” but I am advised by the Revenue Commissioners that no letters were reissued. She may be referring to the fact that letters were issued in October to some 988,000 property owners who paid their 2013 LPT by lump sum (i.e. by debit or credit card, cash, cheque or postal order or single debit authority) or by way of regular cash payments through a service provider. These letters were not a reissue but are a normal annual feature of the pay and file season for LPT and, as I have explained to the House previously in written replies, are asking property owners to decide how they want to pay their LPT in respect of 2014, and advise Revenue.

Of the 988,000 letters, I am informed that approximately 950,000 were issued by post and 37,000 were issued electronically. The specific costs associated with the issue of these letters were €694,136 and are broken down as follows:
Postage: €441,762
Advertising: €191,290
Paper: € 30,669
Envelopes: € 19,495
Printing: € 10,920
Total €694,136

Letters were not sent to property owners who paid their 2013 LPT by deduction at source from salary/occupational pension, from certain Government payments or direct debit, or to those who opted to defer their full LPT liability or those who claimed an exemption, as all these options will continue to apply for 2014. This approach had the effect of reducing the cost by some €200,000. No action is required to be taken by these property owners, unless they wish to change to a different payment method for 2014.

On the cost and number of contractors, the Commissioners have advised me that in the context of the LPT, external contractors have mainly been engaged in two different functional areas, namely IT development and the provision of call centre services. The call centre costs are published on a quarterly basis on the Revenue website, in accordance with Government policy that all payments over €20,000 should be published. A total of €2.712m has been paid to date in 2013.

A key aspect of the service provided to Revenue is the capacity to scale resources up and down in response to demand. At the outset, in March 2013, 40 agents were engaged. In order to support the filing dates in May 2013, up to 200 agents were engaged. The numbers were reduced after the filing dates and the numbers engaged during the months of July, August and September were at maintenance levels only. With effect from mid-October there was a requirement to increase capacity to handle the 2014 filing dates and the number of agents engaged is increasing incrementally to the same levels as May 2013.

A total of €6.903m has been paid to external IT systems developers in 2013, and the average number of “whole time equivalent” staff working on IT developments was 38.

In addition to external resources, at the end of October 2013, 163 whole-time equivalent Revenue staff and 75 temporary clerical officers were assigned to full time duties related to the administration of LPT.

The total costs incurred in setting up the Local Property Tax to the end of October 2013 under the main headings are as follows. These are fully in line with the provisions made in the 2013 Expenditure Report.
2012 2013 (End-Oct)
Total Salaries €757,000 €8,921,000
External IT Systems Development €1,552,000 €6,903,000
Postage €1,150,000
Call Centre (External) €2,712,000
Advertising €596,000
Accommodation / Fittings etc. €492,000
Financial Transaction Charges €866,000
Printing €209,000
Valuation Fees €66,000
Training Travel Costs €37,000
Security €27,000
Consultancy Fees Nil
Total €2,309,000 €21,979,000

I am also advised that the operation of the LPT website, like Revenue’s other online services, is part of Revenue’s normal business and there are no outsourced elements. The LPT website uses existing equipment and services and has little or no additional overhead cost.