Minister for the Environment, Community and Local Government, Phil Hogan, has announced the establishment of a high level and focussed Inter-Departmental Expert Group to look into plans for a property tax. According to Hogan, the panel will consider the structures and modalities for an equitable valuation-based property tax that will replace the current EUR100 (USD131) Household Charge.

The annual Household Charge, which came into force earlier this year, has proved controversial. It was intended to act as a forerunner for a comprehensive property tax, with the government, under its bailout commitments to the European Union (EU) and International Monetary Fund (IMF), scheduled introduce the tax in 2014. The Household Charge is expected to raise EUR160m in 2012, but the government has faced pressure from a group of rebel lawmakers calling on taxpayers to boycott the levy. Revenue from the Charge will be used to pay for local services.

According to Hogan's figures, over 66,000 residential properties have so far registered for the Household Charge, equating to revenue of EUR6.6m. He said: ‘I would like to acknowledge and thank those people who have registered their properties and paid the Household Charge at this early stage. The large numbers of people paying the charge is a clear indication of compliance with the legislation and the acceptance that it is necessary to fund vital local services in our communities.’

The Charge will now be replaced with what the government calls a more equitable property tax in 2013/2014. Making the announcement, Hogan stressed the government’s firm commitment to introduce a valuation based property tax to replace the Household Charge at the earliest opportunity. He said said: ‘Ireland is one of the last countries in Europe to introduce property-based charges to fund local services. The tax base in Ireland needs to be broadened but the focus must move away from taxing people’s work to lessen the impact on growth and to support employment."

Hogan continued: ‘The expert Group is to report to me by end-April 2012 on the design, scope and implementation of the property tax and I intend to bring proposals for an equitable valuation-based property tax to replace the Household Charge to Government as soon as possible thereafter.’

The Group will be independently chaired by Dr. Don Thornhill, who has relevant expertise in this area. The Group will be comprised of senior officials from the Departments of Environment, Community and Local Government; Finance; Public Expenditure and Reform; Communications, Energy and Natural Resources, Social Protection and the Revenue Commissioners. The Group may also call on technical expertise from the Central Statistics Office, An Post/Ordnance Survey Ireland, Property Registration Authority, the Valuation Office, the Property Services Regulatory Authority and other individuals, organisations and agencies as it may deem to be of assistance in carrying out its work.

Any proposals for a residential property tax will need to meet the immediate financial requirements of the EU/IMF programme. The Group is also charged with devising a scheme that can provide a stable funding base for the local authority sector in the medium and longer terms incorporating an appropriate element of local authority responsibility subject to any national parameters. It will need to ensure the maximum degree of fairness between and across both urban and rural areas, and the levy will need to be collected centrally by the most cost efficient and effective means.

The government wants to be able to facilitate easy and/or phased payments by households, allowing the tax to be easily determined (e.g. on a self assessment basis), and have regard to the information currently available (or to be made available through registrations for the household charge) on residential property and/or house ownership details. The Group is also to consider the appropriate arrangements for a robust audit function; and strong enforcement and penalty provisions for non-compliance.