A Ceann Comhairle,
I raise this issue today because I believe there is a very real risk that many thousands of home-owners face being over-charged the new Local Property Tax.
The Local Property Tax is an unfair tax. It’s anti-urban, anti-jobs, and above all takes virtually no account of ability to pay.
But the administration of the tax makes that unfairness even worse.
The Revenue Commissioners used a complex statistical model to arrive at its estimate for each property around the State. However, such obvious determinants of property price as size, home condition, extensions or garden size were either imputed from area averages or did not form part of this model at all.
The public is not generally aware of this.
It means that smaller homes can end up in a valuation band that is higher than the true value.
The fact is that by their own admission, the Revenue estimate will be up to €50,000 out in a large number of cases, and up to €100,000 and more out in about 10% of cases.
The public is not generally aware of this either.
Instead, Revenue has used the model to provide highly crude valuation guidance based on area averages within each electoral division. But because it’s based on averages, in many cases this guidance is utterly meaningless.
I cross-checked 2012 home values in one electoral division in my constituency with the guidance provided by Revenue. Of the ten properties sold in 2012, seven did not correspond to the area valuation band identified by Revenue. What practical use is it then?
There is a real risk that many people will be over-charged because they are unaware of how unreliable the Revenue’s approach has been, or they just don’t want to run the risk of second-guessing them.
To add insult to injury, a pq reply to me this week confirmed that if you simply pay Revenue’s estimate and later discover that it’s an over-estimate, you can’t get a refund. Again, the public is generally unaware of this.
There is also a complete lack of reliable sources on which to base property valuations.
In one estate in my constituency 2012 sales ranged from €100k to €200k. Which band do residents pick?
In addition, there is no information on home size, type or condition in the property price register making it very difficult to compare.
And it is astounding that the Revenue would advise home-owners to base their valuation on advertised property prices. Asking prices are often much higher than selling prices. In one estate in my constituency the last two properties sold went for less than €250,000 but the latest for sale is asking €350,000.
Minister do you accept that Revenue’s approach has serious shortcomings and will you take action to deal with this?
At this stage, there is a need for 7 steps to be taken to deal with the problem:
- give far more detailed guidance, particularly by house size
- offer guidance on the percentage reductions that should be applied where the only comparable properties are in 2010 or 2011
- update the property price register to provide details of property size, type etc
- be far more forthcoming about just how inaccurate the revenue estimates are
- make it far clearer to the public that the Revenue Estimate is not a bill
- remove Revenue recommendation to base house valuation on local asking prices
- allow for a refund where the property is mistakenly over-valued