Property Tax

Jul
2014
04

Economy, Oral Questions

I recently asked the Minister for Finance a question about the hardship property taxes are causing people on welfare.
To ask the Minister for Finance the reason a person who offered to have their property tax bill deducted from their pension, had that request declined on the basis that they would be left with an income below €186, and as a result has been levied with penalties for the arrears, penalties which continue to rise; and his views on whether this is fair and equitable.

REPLY.

As the Deputy has not provided details of the case in question, I am not in a position to address the specific circumstances and will, instead, respond in general to the matters raised.

By way of general comment, the deduction at source payment option, including from Department of Social Protection (DSP) payments, is a very efficient and cost effective payment method for Local Property Tax (LPT) and arrears of Household Charge (HHC). There are no fees or charges associated with deduction at source and the property owner simply indicates their payment preference on the LPT Return form. The deduction at source payment method, once selected and implemented for any particular year, carries forward to following years unless an alternative payment method is selected

However, deduction at source from DSP payments cannot be facilitated where such weekly deductions would have the effect of reducing the person’s take home amount to below the minimum weekly rate of supplementary welfare allowance, which is currently €186 per week. The concept of a de minimis welfare payment from DSP is enshrined in social welfare legislation and it was considered, at the time of the introduction of LPT, that it was not appropriate to change the law in this regard.

In regard to the operation of the DSP deduction at source payment method, I am advised by Revenue that there is ongoing dialogue between its officials and DSP to ensure that the system runs as smoothly as possible and that where it is not possible to deduct LPT payments from a liable person on foot of the de minimis rule, that early notification is provided and alternative payment methods put in place.

In relation to the Deputy’s comments on the application of penalties, I am advised by Revenue that no such penalties have been levied to date on any case where deduction at source from a DSP payment was refused on foot of the €186 limit. The Deputy may actually be referring to the increase in Household Charge (HHC) arrears liabilities from €100 to €200 with effect from 1 July 2013. Section 156 of the Finance Local Property Tax Act (as amended) converted all such arrears of HHC to LPT and made Revenue responsible for the collection of those amounts. This increase was applied to all HHC arrears regardless of any subsequently selected payment method, including HHC. During the recent HHC Arrears / LPT compliance campaign, Revenue gave a commitment that penalties or interest would not be applied against any person who met their obligations by the end of April 2014.

Recipients of DSP payments should be aware that the LPT legislation provides for full and partial (50%) deferrals of the tax within certain specified thresholds. For example, a property owner can claim a full deferral where his/her gross income does not exceed €15,000 if single/ widowed or, €25,000 in the case of a couple. To qualify for a partial deferral, the property owner’s gross income must not exceed €25,000 if single/widowed or, €35,000 in the case of a couple. These income threshold limits can also be adjusted upwards by including 80% of any gross mortgage interest payments. The interest element of any such deferral or partial deferral is 4% as distinct from the normal 8% charge that applies in respect of unpaid liabilities. Any person whose sole income is such that the deduction of LPT would bring them under the €186 limit will qualify for the deferral or partial deferral (including deferral of the Household Charge arrears). I am assured by Revenue that the application process for deferral and partial deferral is a simple matter and can be done through the online system atwww.revenue.ie or by contacting the LPT Helpline at 1890 200 255. In most circumstances where a deferral or partial deferral is granted, it remains in place for the current valuation period, i.e. for the tax years 2013, 2014, 2015 and 2016.

If a person who is eligible does not want to avail of the deferral or partial deferral he or she should make alternative arrangements to meet the LPT/HHC obligations through one of the other payment options that Revenue has put in place. For example, where the deduction at source option is not available property owners can avail of monthly direct debits through their financial institution or certain credit union accounts. Alternatively they can make regular weekly or monthly payments to one of the four approved payment service providers, which are An Post, Payzone, PayPoint and Omnivend. Details in regard to the payment service providers including information on the various transaction fees are available on the Revenue website at www.revenue.ie. It is important that I stress at this point that where property owners have already been advised that they are unable to avail of deduction at source from a DSP scheme in respect of LPT/HHC liabilities, they should immediately telephone the LPT Branch helpline at 1890 200 255 to make alternative payment arrangements.

Revenue has confirmed to me that almost 14,000 property owners availed of deduction at source from DSP payments to meet their LPT liabilities during 2013. Shortfalls in payment on foot of the €186 threshold occurred in 1,203 of these cases, of which 200 were for less than €10. Revenue contacted this tranche of property owners in April 2014 to advise on the various payment alternatives available including deferral or partial deferral. No interest or penalties were applied in these cases and alternative payment arrangements have been made by many of those contacted. The number of property owners opting for deduction at source from DSP payments in respect of both 2014 LPT and arrears of HHC has risen to almost 25,000 to date. Similarly to 2013, Revenue has identified and contacted almost 2,000 of these cases which are impacted by the €186 threshold to advise on the various payment alternatives, no interest or penalties have been applied and in most cases other payment arrangements have been put in place.