Property Tax from the Dail Committee 21 Feb

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Just went up today. Posting to ensure the catch before editing, if any. The level of detail offered below is much better than anything before. Long read but worth it.

oireachtasdebates.oireachtas.ie/ … endocument

I enclose the Property tax bit , we kick off on Page 6.

(Speaker Continuing)

[Ms Josephine Feehily:] Tax non-compliance is serious and where there is sufficient evidence to support a criminal court case, the matter may be pursued by our dedicated investigation and prosecution division.

Last year we collected €36.7 billion for the Exchequer, €21 million more than projected. This year we have a more significant challenge, with a somewhat higher target of €38 billion and a new local property tax to introduce in an environment that remains challenging for Revenue, for business and for taxpayers.

Deputy Kieran O’Donnell: I welcome Ms Feehily and her colleagues. The big issue for people is the property tax. We are seven days from 1 March, which is when the Revenue Commissioners will be writing to people with explanatory guidelines on valuation. To bring clarity to the situation, because people are going through difficult times and they need to be clear about these things, when will Revenue write to people? How many people will Revenue to be writing to? If people do not receive a letter, are they still liable? We read in the media that GPS technology will be used as a basis for valuations. Is that true?

Ms Josephine Feehily: We were conscious from the very beginning of the need to have as much information as possible available about the logistics and administration of the local property tax. The rest of it is not my business. As soon as this was announced on budget night, we had extensive frequently asked questions, FAQs, available on our website. We have updated those throughout January and then last week we published a booklet on the website. The booklet members have is dated 31 January and because there were amendments to it, there will be another version. We have published the form for the return so people can look at what they must do.

Deputy Kieran O’Donnell: It does not incorporate the amendments that will be going into amended booklet.

Ms Josephine Feehily: It cannot. Those are currently before the Oireachtas. That was our approach with the information during January. We have also engaged with representative bodies for the elderly, community information centres and employers because they will all have to work with us in implementing this. We have done a lot of work behind the scenes to engage with relevant groups on this. We are now awaiting the passage of the amendment Bill. On that basis, we now expect to write to everyone in the second week in March, on or around 11 March. We will be writing to 1.6 million people.

Deputy Kieran O’Donnell: Is that 1.6 million households?

Ms Josephine Feehily: There will be a name and address on the letter. From census data, we know there are 1.99 million properties. There is no single property register in the State so we had to compile one. This is where GPS data came into play. We acquired the geo-directory, a directory that identifies every property in the country.

Deputy Kieran O’Donnell: Who developed that?

Ms Josephine Feehily: A private company called GeoData Surveying Limited, but we acquired the data under the provisions of the Finance (Local Property Tax) Act 2012. We did not buy it.

Deputy Kieran O’Donnell: How much did that cost?

Ms Josephine Feehily: It cost nothing, we got it under the Act. The company was obliged to supply the information in accordance with the law.

The company had a directory of properties and we have databases of names and addresses and we have been merging the two. We also supplemented the directory with databases from the Local Government Management Agency, the Residential Tenancies Board and all the other databases we have had over the years from various third parties in accordance with the law.

Ms Josephine Feehily: GPS technology underpins the geo-data. It is a code for every property. It is not a picture. We are not taking photographs of someone’s bedroom from a satellite.

Deputy Kieran O’Donnell: So Revenue is not flying around?

Ms Josephine Feehily: I was amused to see a headline talking about aerial photography. This simply uses satellite technology. The company has identified and mapped every property and given it an identifier. It does not take a picture of the property.

Deputy Kieran O’Donnell: Who else would use these data?

Ms Josephine Feehily: Many commercial companies would use them.

Deputy Kieran O’Donnell: Any State companies?

Ms Josephine Feehily: I have no idea. This is a private commercial concern and I do not know who it sells to.

Deputy Kieran O’Donnell: Are any data protection guidelines on people’s privacy being breached?

Ms Josephine Feehily: No. The data were acquired under the law. The Data Protection Commissioner works closely with us on an ongoing basis because we have such significant data holdings. This simply identifies properties. We are matching those properties with names and addresses so we will be writing to people. This is a long-winded way of answering the Deputy’s question of this being a letter for each household.

Deputy Kieran O’Donnell: Revenue will be writing to 1.6 million households.

Ms Josephine Feehily: We will be writing to 1.6 million named individuals.

Deputy Kieran O’Donnell: Will all the letters go out at the same time?

Ms Josephine Feehily: They will take four weeks to issue because clearly we must put individual names on the letters and get them through the postal system.

Deputy Kieran O’Donnell: What will be in the letters?

Ms Josephine Feehily: The new version of the booklet, the tax return form and a letter that will explain to people what they must do. At the end of the letter, there will be what is known as the Revenue estimate. The Deputy will understand if I describe it as similar to a VAT section 22 estimate.

Deputy Kieran O’Donnell: Ms Feehily has done her homework.

Ms Josephine Feehily: It is an estimate based on average indicative values.

Deputy Kieran O’Donnell: In many cases the section 22 estimates were grossly overstated.

Ms Josephine Feehily: This is a self-assessed tax. The form asks people to assess the market value of their homes themselves.

Deputy Kieran O’Donnell: What is the basis of the estimated valuation?

Ms Josephine Feehily: We are not doing an assessment of the valuation. We will provide a valuation guide that will be on the Revenue website before 11 March to coincide with the issuing of the letters.

Deputy Kieran O’Donnell: Will that guide go out with the manual that goes out with the letter?

Ms Josephine Feehily: No, it is an interactive guide.

Deputy Kieran O’Donnell: Many people do not have access to the Internet.

Ms Josephine Feehily: Census data tell us that 80% of households have a computer.

Deputy Kieran O’Donnell: Many older people will not have access to the Internet.

Ms Josephine Feehily: The letter advises people that if they do not have access to the Internet, we have made arrangements with community information centres and Revenue offices for them to come in. We will provide those offices with a paper download of the data behind our model. People can refer to that paper download in certain key places but this is an interactive model that will enable a person to find his street and will give an indicative value for the average price of a house based on certain characteristics, such as being detached, semi-detached, a bungalow, new or old and so on.

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Cont.

eputy Kieran O’Donnell: Will the letter contain the Revenue estimate of valuation?

Ms Josephine Feehily: No. The letter will include an estimate of an amount of tax that is broadly based on the valuation but it is not a value because a person must value his own house. We will not tell people their houses are worth €200,000.

Deputy Kieran O’Donnell: Will the Revenue estimate the tax?

Ms Josephine Feehily: We will estimate the tax we think might be due.

Deputy Kieran O’Donnell: If a person divides that by 0.18, he will come up with his valuation.

Ms Josephine Feehily: Bearing in mind the bands are €100,000 then €50,000, it does not give an accurate valuation.

Deputy Kieran O’Donnell: If Revenue comes up with a tax liability, surely it should be able to provide the person with the band?

Ms Josephine Feehily: It will be a figure. The bands are listed with the figures so people can interpret it.

Deputy Kieran O’Donnell: The ordinary person will see his tax liability. It should surely then be straightforward to put beside that the band it is in.

Ms Josephine Feehily: That information will be in the booklet.

Deputy Kieran O’Donnell: People will be interested in finding out which band their property is in and how much they must pay. When they receive the letter from Revenue stating the tax liability, it will be difficult for them to work out the band. It is difficult enough for people to pay another tax, but it is important to make the process as straightforward as possible. Would it be possible at this point to include the price band of the value of the house, so that the householder would see that the basis for the calculation of the liability is X band?

Ms Josephine Feehily: I doubt it because I suspect that all the letters have been printed and it just remains to insert the name and address. However, I will check it.

Deputy Kieran O’Donnell: It would be very important to have an information campaign to explain it.

Ms Josephine Feehily: Let me assure Deputies there will most certainly be an information campaign. The information campaign will begin towards the end of the first week in March. We are very conscious of the legislative background to the property tax, which has put our process slightly behind.

We will begin a significant information campaign towards the end of the first week in March.

Deputy Kieran O’Donnell: When people get their letter stating their liability I would like them to know immediately the band value of their property. If that is not indicated in the letter, it will create confusion among the public.

Ms Josephine Feehily: I do not want to say I will do something when I am not sure I can do it, but unless one’s house is valued over €1 million, there are only 20 numbers and they are listed in the information booklet. The estimate will have one of those numbers on it. It is very easy to see from the number which band the property is in. Everybody will get one of these booklets.

Deputy Kieran O’Donnell: What is the basis of the Revenue Commissioners estimation of the property valuation?

Ms Josephine Feehily: I am not an economist, but I have an economist who has done very sophisticated hedonic regression work and essentially Revenue has gathered up the property values from the stamp duty system since 2010. Therefore, they are not the inflated values that applied prior to 2010. We have approximately 36,500 values in the model.

Deputy Kieran O’Donnell: Let me restate, the valuations are based on 2010 values.

Ms Josephine Feehily: They are based on properties sold since 2010. We have the figures for 2010, 2011 and 2012 and we recently added the figures for the most recent sales. In addition, we have valuations available from other data sources. We have bought some values in cases in which there were gaps in the data and our existing data was not sufficiently representative. We have paid to fill in the gaps. We have a representative sample that will give average indicative values at the level of electoral area. of which there are approximately 3,500 areas. It will distinguish between houses that are detached, bungalow, semi-detached, rural, urban and before or after 2000.

Deputy Kieran O’Donnell: What does Ms Feehily mean by “before or after 2000”

Ms Josephine Feehily: Built before or after the year 2000. It is up to the householder who knows his or her house to value it.

Deputy Kieran O’Donnell: Based on a valuation of the property on 1 May 2013?

Ms Josephine Feehily: Yes.

Deputy Kieran O’Donnell: Obviously people can get a valuation from an auctioneer or come up with their own valuation.

Ms Josephine Feehily: Yes.

Deputy Kieran O’Donnell: An issue that has come up is what will happen if a property is under-valued. People need to be reassured that if they arrive at a genuine figure for the valuation they will not need to worry about the valuation of the property in the future.

Ms Josephine Feehily: In accordance with our normal customer service standard we have a presumption of honesty. That presumption of honesty extends to all taxes. The property tax is a self-assessment tax, so what we have said again and again, and the Minister has repeated this on our behalf, is that in cases in which a person approaches this honesty, we will accept the valuation. We always do. When we come to do compliance, which will certainly not be this year, we will be looking at outliers. There is no doubt that we will look at outliers, as we would not be doing our job otherwise.

Deputy Kieran O’Donnell: What does Ms Feehily mean when she refers to “outliers”?

Ms Josephine Feehily: When we have all the returns, we will have lots of values for properties. Let me give an extreme example - if a return states property X is in band 3 or 4 and it should be valued at €1 million. Clearly that is a big outlier. Our compliance campaign will start at the outliers, at the extreme end.

Deputy Kieran O’Donnell: Will it be based on an risk analysis?

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Cont.

Ms Josephine Feehily: Yes, we will be focusing on the biggest gaps that will arise from our risk analysis. If people want reassurance, may I suggest they use the guidance model honestly and that will be sent out to everybody. We also suggest they can use the Property Services Registration Authority, if houses were sold in their area, the values are available at the level of an address.

Deputy Kieran O’Donnell: Will there be a helpline in order that people can pick up a phone and ring and seek advice from the Revenue Commissioners?

Ms Josephine Feehily: There will be a lo-call helpline which we will staff at the beginning of March. We have worked extensively with community information centres and are training their volunteers. They will give us a great deal of help. We are hopeful that the process will work.

Deputy Kieran O’Donnell: In terms of the valuation, people should have nothing to fear if they follow----

Ms Josephine Feehily: If they approach the valuation honestly and reasonably, people have nothing to worry about. That is at the heart of self-assessment.

Compliance work will not be done immediately because my major worry this year is to implement the property tax - getting the returns out and in and collecting the money. The compliance element of the work will begin with the significant gaps in the valuations. If there is an outrageous gap between the norm that is emerging for an area and returns, these are the cases in which we will start our work on compliance.

Deputy Kieran O’Donnell: I note the Revenue Commissioners sought an additional 100 staff. How much will it cost to implement this new area of taxation?

Ms Josephine Feehily: Obviously additional staff will be working in different places, but we are locating the administrative centre in Ennis, County Clare. Staff were becoming free in Ennis as a result of public sector reform initiatives with payroll and a number of other shared service initiatives. We would have had to redeploy these people and it made much more sense to move the work to this area. The paperwork will be done in Ennis, the planning will be done in Dublin. Obviously there is a big overlay on the IT side and the Office of the Collector General in Limerick will be central to that, as they will be collecting the money.

There is a live online system. I looked at the prototype last week. The screens are available and the system is nearly ready. The logistics are on track. Staff who will be redeployed from other Departments will come this week or next week. I have lost track of the dates. We will be hiring some temporary clerical staff in Ennis and in Limerick to supplement the staff there.

We sought an allocation of 100 staff as this is a new tax. We had no idea of what staff it will take, but now it will certainly not stop at 100. We must deal with 1.6 million tax returns and we have never handled that large volume in a single month. This is colossal and it will eat into our own resources. We will be supplementing it.

The allocation in the expenditure report for 2013 for property tax is €25.9 million.

Deputy Kieran O’Donnell: Does Ms Feehily have adequate resources to implement the tax?

Ms Josephine Feehily: The Deputy should ask me in a few months. Let me rephrase that. We have done our best. I have enough cash resources for the IT development. We got a capital sum for that. We have enough cash to run the publicity campaign and so on. If 1.6 million people all telephone on the same day, we will not have enough staff to deal with them. That would be an enormous challenge.

The challenge is as follows: to make the information campaign as good as it can be; to stagger the issue of the letters, apart from the logistics of the postal system which will stagger it; and to encourage as many people as possible to file online. It is a very simple procedure to file online. It will be similar to the way one pays motor tax online. We will give people a PIN to file online. If all the pieces fall into place, we will have sufficient resources. If they do not, we will eat into our other resources, and that is what we will do.

Deputy Kieran O’Donnell: Will Ms Feehily restate the way the process will work? First, I understand the letters will issue from 11 March and continue over a four week period. What should people who are seeking an exemption or deferrals do? Will she outline the return dates, the payment dates and the methods by which people can pay?

(Speaker Continuing)

[Deputy Kieran O’Donnell: ] I want Ms Feehily to deal with the issue of ability to pay and financial hardship. This new measure is being introduced in the amended Bill. It is obviously an issue. As public representatives, we are conscious that ability to pay is a key factor. Can Ms Feehily quickly run through the logistics that come into play in terms of returns, payment dates and payment methods, when the people to whom letters are issued seek exemptions or deferrals?

Ms Josephine Feehily: The existence of a number of databases means there may be some duplication of letters. I want to alert members to our inability to be fully certain that we have cleaned out all the duplication. I want to mention right now that some people may get two letters.

Deputy Kieran O’Donnell: Before Ms Feehily expands on that, can I ask her what a person who does not receive a letter should do?

Ms Josephine Feehily: We will change the message in our publicity campaign when we have finished issuing the letters. As this is a self-assessment tax, those who do not receive letters will have the same obligation as those who do. At the beginning, the message will be “the letters are going out - here is the helpline”. In April, the message will be “all of the letters have gone out - if you have not got one, here is the helpline, get yourself a form or go online”. It will move along like that. The filing date for paper returns will be 7 May. The filing date for online returns will be 28 May.

Deputy Kieran O’Donnell: That means one has to file a return. It does not mean one has to make a payment at that time.

Ms Josephine Feehily: No.

Deputy Kieran O’Donnell: Okay.

Ms Josephine Feehily: One will have half a dozen payment options.

Deputy Kieran O’Donnell: If a person who is seeking an exemption or a deferral files his or her return on 7 May or 28 May, when will he or she have to write to the Revenue Commissioners to that effect? I refer to people living in houses affected by pyrite, people with certain categories of disability and people entitled to compensation.

Ms Josephine Feehily: With the exception of those claiming an inability to pay - I will come back to that category separately - one will not have to write to us.

Deputy Kieran O’Donnell: I want Ms Feehily to deal with the category she has mentioned.

Ms Josephine Feehily: I will. It is separate because it is different.

Deputy Kieran O’Donnell: I accept that.

Ms Josephine Feehily: I remind the committee that this is a self-assessment tax. People in the other categories will be required to enter in their returns the grounds on which they are claiming deferrals. They will be able to choose from a list. They will simply put it in a letter.

Deputy Kieran O’Donnell: Everyone will have to make a return-----

Ms Josephine Feehily: Everyone has to make a return.

Deputy Kieran O’Donnell: -----regardless of whether they are paying, they are exempt or they are seeking a deferral.

Ms Josephine Feehily: Yes.

Deputy Kieran O’Donnell: Okay.

Ms Josephine Feehily: When they are filling out the form, they will use a number which they will get from the booklet to indicate the grounds on which they are claiming a deferral or exemption.

Deputy Kieran O’Donnell: It will be a code.

Ms Josephine Feehily: That will be done on a self-assessment basis. In keeping with the principles of self-assessment, that claim will be accepted at face value until we do our compliance as we do with all other taxes.

Deputy Kieran O’Donnell: Self-assessment.

Ms Josephine Feehily: We will not be looking at those claims in May.

Deputy Kieran O’Donnell: Okay.

Ms Josephine Feehily: I will leave the other category until the end. In the majority of cases-----

Deputy Kieran O’Donnell: If people get a separate valuation or submit a different valuation-----

Ms Josephine Feehily: That is their business.

Deputy Kieran O’Donnell: -----will they just fill in the relevant code for the band their property is in?

Ms Josephine Feehily: They will be able to fill in a box on the form to set out the band the property is in and the amount of money concerned.

Deputy Kieran O’Donnell: That is fine.

Ms Josephine Feehily: When they decide the value, they will fill that in on the form. If they claim an exemption, they will fill that in on the form. Those forms will be taken and processed-----

Deputy Kieran O’Donnell: Will a claim be more likely to be followed up as a risk if the valuation differs from the valuation issued by the Revenue Commissioners?

Ms Josephine Feehily: That will depend on the margin, to be honest.

Deputy Kieran O’Donnell: The differential.

Ms Josephine Feehily: The gap.

Deputy Kieran O’Donnell: Fine. I apologise for interrupting Ms Feehily in mid-stream.

Ms Josephine Feehily: There will be six payment options. If one is filing online, one will be able to pay with a credit card or a debit card. If one is filing on paper, one will be able to avail of the single debit authority system, which is like an electronic cheque. One will fill in one’s bank account number and authorise the Revenue Commissioners to take a specific amount of money from it.

Deputy Kieran O’Donnell: What date will that have to be paid by?

[Duisigh]

Cont

Ms Josephine Feehily: We will access one’s bank account to take the payment on 21 July, if I remember correctly. It will be the middle of July.

Deputy Kieran O’Donnell: Yes. I have seen the date. It is 21 July. Ms Feehily is correct. I would like to clarify something with regard to the payment dates. If we say, for the sake of argument, that a person files his or her return-----

Ms Josephine Feehily: Can I finish the point I was making about the payment options?

Deputy Kieran O’Donnell: I am keen to get clarification on the chronological order. Manual returns will be filed on 7 May. Online returns will be filed on 28 May. If one decides to pay by direct debit of equal amounts over a six-month period-----

Ms Josephine Feehily: If one is paying by direct debit over a six-month period, the date on which we will go to the bank-----

Deputy Kieran O’Donnell: Is it 1 July?

Ms Josephine Feehily: I think it is 15 July.

Deputy Kieran O’Donnell: On what date would one have to go to the bank?

Ms Josephine Feehily: When one completes one’s return form and sends it in, one must select one’s payment option at that point. One has made one’s decision at that point.

Deputy Kieran O’Donnell: What about people who want to pay by cheque or cash?

Ms Josephine Feehily: If one wants to pay by cheque, one can include the cheque. We are in discussions with four service providers that may be willing to accept cash over the counter from those who want to pay by cash.

Deputy Kieran O’Donnell: By what date would such a payment have to be made?

Ms Josephine Feehily: That will depend. One would be able to make such a payment any time up to 1 July.

Deputy Kieran O’Donnell: In essence-----

Ms Josephine Feehily: One will also be able to make an over-the-counter payment every month from then on.

Deputy Kieran O’Donnell: Ms Feehily is basically saying that if one is paying by direct debit, by cheque or by cash, one will have to start making payments by 1 July. If one is paying by direct debit or by electronic transfer, one will make an indication to that effect and the money will be taken out of one’s account on 21 July. If one is paying by direct debit, it will be taken out on 15 July.

Ms Josephine Feehily: There is a missing option. One will be able to opt for deduction at source from one’s salary or one’s pension.

Deputy Kieran O’Donnell: Can Ms Feehily explain how that will work?

Ms Josephine Feehily: It works like PAYE. It is the very same as PAYE.

Deputy Kieran O’Donnell: What payments will be involved, in terms of-----

Ms Josephine Feehily: Salary payments, obviously-----

Deputy Kieran O’Donnell: One will have to elect for that.

Ms Josephine Feehily: One will have to elect. In addition, social welfare and pension payments-----

Deputy Kieran O’Donnell: One will elect on the form.

Ms Josephine Feehily: One will elect on the form. Single farm payments-----

Deputy Kieran O’Donnell: Okay.

Ms Josephine Feehily: We will provide that information, in the same way as our normal PAYE output, to employers and to the Department of Social Protection in the middle of June.

Deputy Kieran O’Donnell: Okay.

Ms Josephine Feehily: I cannot say when they will start making deductions, but it will be after 1 July. Pay periods are different in different companies.

Deputy Kieran O’Donnell: In essence, explanatory memorandums will be received on 11 March or thereafter. Manual returns will have to be filed by 7 May. There will be an extra three weeks to make online returns. They will have to be done by 28 May. One will choose one’s method of payment on one’s form. If one indicates that one wants to make payments by means of direct debit or electronic transfer, they will start coming out from 15 July in the case of direct debit. If it is a single once-off payment, it will come out on 21 July. If one wants to pay by cash, one will be able to make a payment every month, from 1 July onwards, if one wishes. If one wants to pay by cheque, one will be able to write a cheque.

Ms Josephine Feehily: Any time one likes.

Deputy Kieran O’Donnell: Obviously, the cheque will have to be dated 15 July.

Ms Josephine Feehily: Legally, it would certainly want to be dated 1 July or later. One will have to allow for the processing times.

Deputy Kieran O’Donnell: Not before that.

Ms Josephine Feehily: One will not have to date it before that.

Deputy Kieran O’Donnell: I would like Ms Feehily to deal with financial hardship before she concludes.

Ms Josephine Feehily: I would like to mention something else before I do so. I do not want to mislead the committee. Deputy O’Donnell mentioned that in the case of deduction at source, people will have to opt into that. When we reach the compliance stage of this, if people have not opted in, deduction at source will happen on a mandatory basis. Such a deduction will be based on the Revenue estimate.

Deputy Kieran O’Donnell: When would that take place?

Ms Josephine Feehily: We will start to process those after the final filing date. During June, we will look at the cases of people who have not engaged.

Deputy Kieran O’Donnell: Will Revenue send them a reminder?

Ms Josephine Feehily: We will send them a letter. There will not be very much time for reminders. This tax must start being paid on 1 July.

Deputy Kieran O’Donnell: When will those who have not engaged be written to?

Ms Josephine Feehily: In the cases of people who have not engaged, the first thing we will do is say publicly “If you have not engaged, write in”.

Deputy Kieran O’Donnell: Okay.

Ms Josephine Feehily: I will not make a promise with regard to when we will write to people until I see the scale.

Deputy Kieran O’Donnell: They will be written to.

Ms Josephine Feehily: We will begin with payroll, moving into mandatory deduction for people who do not engage.

Deputy Kieran O’Donnell: Before that stage is reached, will people-----

Ms Josephine Feehily: They will get a letter.

Deputy Kieran O’Donnell: There will be cases of people who inadvertently miss the final date through no fault of their own. I refer to people in hospital or in nursing homes.

Ms Josephine Feehily: People in nursing homes are exempt.

Deputy Kieran O’Donnell: Right. People might be in hospital. Given that this is a new tax, people are entitled to be written to.

Ms Josephine Feehily: I will put it this way. It is a question of logistics. I completely understand the Deputy’s point. A letter will be sent to people in the salary age bracket and there will be publicity. If we are going to implement this from 1 July, there will not be much time for them to respond. They will have to respond to the letter quite quickly.

Deputy Kieran O’Donnell: How quickly?

Ms Josephine Feehily: It will only be a matter of days.

Deputy Kieran O’Donnell: I think we should certainly allow people a week. I understand what has to be done when a new tax of this nature is being introduced. We deal with people in our constituencies. We need to learn from the experience of the other taxes. We must proceed on the basis that people are working from a position of honesty. It would be important for people to be issued with a letter and to be given sufficient time to respond. There will be genuine cases. I ask Ms Feehily to deal with financial hardship and ability to pay, which is a huge issue.

[Deputy Kieran O’Donnell: ] How will deferrals operate in practice? For how long will it be possible to have a deferral? What criteria will be used? People are experiencing serious difficulties, particularly with mortgages.

Ms Josephine Feehily: The Deputy is familiar with the existing deferrals that are in the law.

Deputy Kieran O’Donnell: Yes.

Ms Josephine Feehily: The income thresholds are €15,000 for a single person and €25,000 for a couple for a full deferral and €25,000 for a single person and €35,000 for a couple for a partial deferral. In both cases, the figures are supplemented by 80% of mortgage interest.

Deputy Kieran O’Donnell: That only applies up to 31 December 2017.

Ms Josephine Feehily: That is the current phase. There is plenty of time to adjust that.

Deputy Kieran O’Donnell: On the provision on financial hardship, which is-----

Ms Josephine Feehily: That is an exceptional provision in the Bill. I am a little constrained in what I can say about this because the Bill is before the Oireachtas. What I can say, however, is that we will prepare very detailed guidelines explaining how we will use that provision when the Oireachtas has disposed of it. It is difficult for me to engage on this issue when the Bill is before the Oireachtas.

Deputy Kieran O’Donnell: When does Ms Feehily expect the provision to become effective? We have another tight deadline. If letters are to be issued on 11 March, some people will have to file returns by 7 May.

Ms Josephine Feehily: I will have it out in plenty of time before 7 May.

Deputy Kieran O’Donnell: The Revenue Commissioners must issue guidelines. For how long does Ms Feehily envisage a deferral will be in place? Will deferrals be provided on an annual basis or rolled over? What criteria will be used? I assume some of the elements pertaining to the administration of other taxes will be used. It is difficult to introduce any tax and taxes must be, above all, transparent and as equitable as possible. What criteria will be used and when does Ms Feehily expect the guidelines to issue?

Ms Josephine Feehily: The criteria that are specified in the Bill use phrases such as “significant” and “unexpected”. We will have to define those terms. The Deputy can take it that we are already working on the drafts. I am conscious that the Bill is before the Oireachtas and, as such, I am somewhat constrained. We will have draft guidelines available, probably next week, but what I will do about publishing them is a slightly different issue.

Deputy Kieran O’Donnell: The Revenue is at the stage where it is-----

Ms Josephine Feehily: I am preparing them now.

Deputy Kieran O’Donnell: What will be the process by which people will be able to apply under the heading of financial hardship? Will they apply using the form in the normal way?

Ms Josephine Feehily: No; they will have to write to us, because there is no way one could capture the richness-----

Deputy Kieran O’Donnell: When must they write to the Revenue Commissioners?

Ms Josephine Feehily: When they are filing their return.

Deputy Kieran O’Donnell: They will enclose a note?

Ms Josephine Feehily: Yes; they will enclose a note, and they will have to give us a lot of information. The Deputy made a point about learning from other taxes. We will have a form asking for information about income and outgoings.

Deputy Kieran O’Donnell: The normal return will be filed. Will an additional form be available for people who want to apply under financial hardship?

Ms Josephine Feehily: Yes.

Deputy Kieran O’Donnell: Will that form issue with the letter?

Ms Josephine Feehily: No.

Deputy Kieran O’Donnell: In that case, how will people obtain the form?

Ms Josephine Feehily: The form will be available in Revenue Commissioners offices, community information centres and all the places where forms are generally available.

Deputy Kieran O’Donnell: When a person comes to file a return on either, he or she will have to file an additional form on financial hardship grounds.

Ms Josephine Feehily: This is a very restricted section. The idea of sending 1.6 million people an encouragement to tell us they are in hardship does not make sense. It is very restricted. All of the other exemptions are available on a self-assessed basis, but this one is very narrow and specific and relates to serious, significant and unexpected issues. The number of people who will fulfil all of these criteria will be quite small. The revised version of the booklet, which will be in the letter when the legislation is processed, will state that if one is applying under this ground, one must get another form. It will also indicate where to get the form.

Deputy Kieran O’Donnell: Deputies deal daily with people who are under huge financial strain. They are aware of the financial position of the country. This is a new tax and if people are experiencing financial hardship, they should be given a fair hearing. When will the Revenue Commissioners commence a publicity campaign on this issue? Ms Feehily has provided considerable detail today which has not been available thus far, which is welcome. Many elderly people like to have queries dealt with by telephone. When will the campaign begin?

Ms Josephine Feehily: It will begin towards the end of the first week of March, in advance of the letters’ being issued. Our experience of previous publicity campaigns is that the nearer they are to the event, the more real and useful they are. Publicity will begin in the first week of March and letters will start to roll out during the second week of March. Online valuation guidance will be available when the letters start to roll out.

Deputy Mary Lou McDonald: I welcome Ms Feehily and her colleagues. I am sure she is aware that there are very many tax-compliant citizens who regard this not as a just or fair measure but as a sort of Big Brother tax and an unfair imposition on them. I note Ms Feehily was amused by the story in the media about GPS data and the notion of Revenue officials hovering overhead taking satellite photographs of homes. Most people did not find the story amusing and it is a measure of just how odious this tax is considered that many people believe it to be the truth.

Ms Feehily set out the process she envisages will be used for acquiring information and for estimating and collecting the tax. I want to explore with her the issue of non-compliance. A great number of the 1.6 million persons or households the Revenue will write to are in what any reasonable person would be consider to be financial hardship. Sadly - and this does not fall to the Revenue Commissioners - the definition of financial hardship will not include someone who is on jobseeker’s allowance or a State pension because, bizarrely, such categories of person are not considered to be in financial hardship. All of these categories of persons are captured as qualifying to pay the tax. What will happen to a person who does not file any return?

Ms Josephine Feehily: First of all, may I clarify the point made on financial hardship? If a person is on jobseeker’s allowance and that is his or her only source of income, he or she will be below the deferral threshold.

Deputy Mary Lou McDonald: The crucial point is that it is a deferral, not a waiver, and persons on jobseeker’s allowance are still fully liable for the tax, albeit at a later point in time.

Ms Josephine Feehily: I accept that. I simply wanted to make that clear in order that people on jobseeker’s allowance understand they do not have to pay and can defer. If somebody does not send back the return, two things will happen. We will obviously engage in publicity at that point, warning people of the consequences and reminding them to send back the return. What we will then do, which is what I was discussing with Deputy O’Donnell, is to write to them stating they have not sent back the return, and we will move to enforce the Revenue estimate. This estimate will have been received in the letter in March and April and we will move to enforce it using the full range of enforcement options available to us.

Deputy Mary Lou McDonald: Will Ms Feehily set out those options?

Ms Josephine Feehily: They will include deduction at source from salary and all of the other enforcement options.

Deputy Mary Lou McDonald: What are they?

Ms Josephine Feehily: Attachment orders are one option. One has attachment of salary and attachment of bank accounts and, if necessary, we can go further than that. Those are the two options we consider to be the most useful.

Deputy Mary Lou McDonald: May I just say-----

Ms Josephine Feehily: If I may finish, the Deputy mentioned social welfare categories. With regard to categories of persons on social welfare pensions who have not sent back a return - this brings me back to the discussion with Deputy O’Donnell - we will write to people in those categories and give them a much longer time of reminder.

[Duisigh]

Cont

[Ms Josephine Feehily:] We will be looking at this next year in the context of the Comptroller and Auditor General. My target this year is to collect €250 million. The legislation requires this to be paid by 1 July.

Deputy Mary Lou McDonald: That of course-----

Ms Josephine Feehily: If people decline to engage, we listened a lot to the discussion around this issue, we have to move quite quickly in order to secure the tax as we do with any other tax.

Deputy Mary Lou McDonald: I understand, I am just simply trying to ascertain what faces the individual who, for whatever reason, is not in a position or chooses not to file a return. The witness has said the Revenue will deduct at source. Presumably that means there will be contact with the person’s employer-----

Ms Josephine Feehily: Yes.

Deputy Mary Lou McDonald: -----and the sum will be deducted as though it were a PAYE payment. Attachment orders to bank accounts have been mentioned. Will the witness explain how that happens? Does Revenue contact the financial institution concerned, AIB, Bank of Ireland, and assess that the person has a deposit account?

Ms Josephine Feehily: We do not carry out an assessment. If we have bank account details, which we would often have because of engagement with other taxes or repayments and so on, we will simply serve a notice to the person and to their financial institution.

Deputy Mary Lou McDonald: And the money will be deducted from-----

Ms Josephine Feehily: The financial institution will be asked to deduct that money and remit it to us.

Deputy Mary Lou McDonald: Will that be from a deposit account or could that be deducted from a person’s current account?

Ms Josephine Feehily: It can be deducted from any account.

Deputy Mary Lou McDonald: From any account that an individual might hold. What about people’s welfare payments? Let us not get distracted by the deferral issue. Let us assume I am a social welfare recipient and I choose not to seek a deferral - let us not get into the rationale - what happens to me then?

Ms Josephine Feehily: We will remind you-----

Deputy Mary Lou McDonald: Revenue has reminded me-----

Ms Josephine Feehily: -----several times of your entitlement to a deferral—

Deputy Mary Lou McDonald: And I seek not to take it.

Ms Josephine Feehily: ----and of your right to displace the estimate by filing a return. That is the legal position. One can displace the estimate anytime by filing a return.

Deputy Mary Lou McDonald: Okay.

Ms Josephine Feehily: If you fail to engage at that point then we will contact the Department of Social Protection to deduct at source.

Deputy Mary Lou McDonald: To deduct from a social welfare payment at source. Will Ms Feehily confirm for the committee that each of these actions - deduction at source from payroll, attachment orders to one’s bank account or direct deduction from a social welfare payment at source - are entirely lawful?

Ms Josephine Feehily: Yes, they are all in the Finance (Local Property Tax) Act 2012 or elsewhere in tax law.

Deputy Mary Lou McDonald: Presumably Revenue has had some level of contact with the banks and the Department of Social Protection in respect of these compliance mechanisms.

Ms Josephine Feehily: We certainly have had detailed engagement with the Department of Social Protection. We must remember this is offered in the first instance as a service. This is a voluntary option that people can opt for in the form. They can opt to pay their local property tax by deduction at source, so we have set up a deduction at source arrangement with the Department of Social Protection which primarily - this is my strong expectation - will be used almost exclusively on a voluntary basis. If people want to spread the payments and do not have salary then their regular payment is their pension and if they want to pay through a deduction at source in their pension, it is entirely voluntary in the first instance. We have had detailed engagement with the Department and arrangements are in place. I have to say I do not believe we have had engagement with banks because, quite frankly, this is a normal part of our toolkit. Attachment orders involving financial institutions would be used a number of times a year in any event, so banks would be familiar with that.

Deputy Mary Lou McDonald: I understand the conversations Revenue has had in respect of people volunteering to have a deduction made from their payment but my concern is around the compliance approach. I say directly the reason that, to my way of thinking, is the more important part of the puzzle is that the vast majority of people who rely on social welfare payments are not in a position to pay this tax. One does not have to be an economist or a mathematical genius to do the sums to understand that if is on a payment of €200 or less, and that is one’s source of income, one cannot afford to pay a property tax at any level. One cannot afford to pay it now and unless one’s circumstances change dramatically, which sadly for many will not be the case, one will not be able to pay it next year or the year after or the year after that. Ms Feehily told us she had made a request for 100 additional staff. I imagine that large numbers of those staff will be dealing with compliance issues. I emphasise that this is not among a cohort of people who wish to be non-tax compliant. It is a group of people who simply cannot afford to pay the tax. It is extremely heavy-handed. To be honest, I have some sympathy for the Revenue because I would not relish the task of deducting this tax at source, from bank accounts or, worse still, from the social welfare payments of people who cannot afford it.

Ms Josephine Feehily: I do not particularly want to be in a position of enforcing any tax. Our tax system is a self-assessment system and if it is not backed up with enforcement, across all the taxes, we have a non-compliance problem, which will get worse.

The strong message we will be sending out to people is that the most sensible thing to do is fill in the return. The legislation provides for a range of deferrals. That is a policy matter; obviously, it is not for me. I remind people, and I will be reminding people in the categories the Deputy mentioned, that if they have not sent back their return on time we will be writing to social welfare recipients reminding them that they had deferral options. I understand the Deputy does not want me to say this but I need to say it because critical to our fairness approach is to remind people whom we know are on low income because we have the welfare file that they have a deferral option and to claim it they must send in the form. I do not want to get to the point of mandatory action. The strategy is for them to send in the form, claim their deferral if they are on low income, and they will qualify. That will ensure we do not have to get to the place the Deputy is discussing.

Deputy Mary Lou McDonald: However, Ms Feehily is prepared and she has the instruments to make this mandatory.

I understand the point Ms Feehily made about the definition of “financial hardship”. I understand it is not her job but the job of the Government and the Oireachtas to make the law and to-----

Ms Josephine Feehily: I am in a difficult position discussing it right now-----

Deputy Mary Lou McDonald: Yes.

Ms Josephine Feehily: -----but we are working on the guidelines.

Deputy Mary Lou McDonald: Does Ms Feehily understand my frustration and the frustration of many people who might tune in to this committee session? There is a deferral but no exemption for people who clearly and fairly fall into “persons experiencing financial hardship”, and Ms Feehily also used the term “fairness” in terms of the application of this tax. The big problem that all of us face, and that Revenue faces, is that Revenue is administering a taxation measure which is not fair. It is not fair to simply offer deferral to somebody on a very low income or on a welfare payment. This is a policy decision by the Government and it is ironic that Ms Feehily would come in here, and whatever about being questioned vigorously by Opposition Deputies, to be questioned by Government Deputies also who have supported this measure. I am not laying the unfairness piece at the feet of Revenue but as public servants the witnesses face a real dilemma.

[Duisigh]

Cont

[Deputy Mary Lou McDonald: ] There is every likelihood the Department will use mandatory instruments to take money from people it knows cannot afford to pay the tax. This proposal is mind-boggling and it is a great pity we have come to this pass.

Is a deferral something people must seek on an annual basis? For example, if a person is on jobseeker’s allowance in May 2013 and still in that position in May 2014, must he or she return to Revenue to seek a deferral? Is a deferral granted for a 12 month period only?

Ms Josephine Feehily: It is granted for the taxable period, which in this case is-----

Deputy Mary Lou McDonald: Six months, is it not?

Ms Josephine Feehily: No, that is the payment period. The tax is stable for three and a half years, until November 2016, the new valuation date for 2017. A deferral is available until a person’s circumstances change in most cases. Therefore, people should come back if their circumstances have changed. However, if the person remains on jobseeker’s allowance, the deferral will continue. Some deferrals have a specific time period such as the one being proposed for homes affected by pyrite, which is three years. If a person is and remains on jobseeker’s allowance, he or she is not expected to come back every year to say this. We will have that information.

Deputy Mary Lou McDonald: Therefore, the Department will not write to people on the issue.

Ms Josephine Feehily: However, if they people go back to work and are in a position to pay, they should come back because their circumstances have changed.

Deputy Mary Lou McDonald: Will Revenue write to people annually?

Ms Josephine Feehily: Until we analyse the shape of the population subject to deferral, which will happen towards the back end of the year, I cannot answer as to what administrative model we will put in place to manage the situation. For example, if almost all of the people subject to deferral are on social welfare payments and we receive a file from that Department, we will not need to write to them because we will have the social welfare data. Why would we write to them asking them to tell us something we already knew? However, if a large proportion are not on social welfare and we need the information, we may build an administrative model to write to them. The Deputy must leave that question with us until we see what happens. We are looking into the unknown. We will receive a lot of returns and have significant work to do to get the shape of the population of who is paying, subject to deferral and exempt. We must then work out treatment models for all of these categories for next year and the year after.

Deputy Mary Lou McDonald: Will Ms Feehily set out for us the charges and penalties that will be levied should somebody such as a person out of work on jobseeker’s allowance who does not have a waiver avail of a deferral? What will the additional charge be for that individual?

Ms Josephine Feehily: I must confess I did not bring that information with me. I can, however, write to the committee setting out the charges and information sought. I do not remember the precise penalties.

Deputy Mary Lou McDonald: Is there an additional charge?

Ms Josephine Feehily: There are penalties for late filing and non-filing, but I cannot remember them offhand. I am not saying there is an additional charge; I just cannot remember.

Deputy Mary Lou McDonald: I am talking about the additional charge attracted in seekig a deferral.

Ms Josephine Feehily: I am sorry; the interest rate on approved deferrals is 4%. However, if people simply do not pay, the interest rate charged is 8%.

Deputy Mary Lou McDonald: To illustrate the utter lunacy of this taxation measure, a person out of work who happens to own his or her own home receives no exemption or waiver from it. The only relief available is that the person can ask not to pay it now but at a later date. To add insult to injury, in seeking that deferral, the State will levy an additional 4% interest charge. That is insane.

I thank Ms Feehily for setting out the details of this taxation measure. I do not envy her the task before her because, like most public servants, she is a decent and honourable servant of the State. This tax is wrong. It is bananas.

Deputy Paschal Donohoe: I, too, want to focus on a particular issue relating to the operation of the property tax. I am concerned about properties that have been flooded in the past or which face the risk of flooding in the future. There are hundreds of such homes within my constituency and I am aware that this is also an issue nationwide. These houseowners cannot get insurance and are in a situation where the market valuation of their property is very low. In situations where a property has been flooded in the past and runs the risk of being flooded again, what valuation should somebody put on that property?

Ms Josephine Feehily: The definition in the law is market value. Usually, despite comments to the contrary, most people have an idea of the market value of their house. If a house or residential property has certain characteristics to do with location, that will influence the market value, either positively or negatively. Therefore, it seems that in the case of people whose properties are vulnerable to flooding, that will have an impact on the market value. They would be perfectly entitled to assess their property themselves, based on their best judgment, at quite a low value.

Deputy Paschal Donohoe: A specific example is where somebody cannot insure his or her home, a terrible situation which faces many through no fault of their own. They cannot insure their home because of the risk of it being flooded. How should that person respond to the tax?

Ms Josephine Feehily: Usually, I find that local knowledge informs people’s assessment of their property’s value. The minimum tax amount is €45 this year and €90 for a full year in the bottom band. Therefore, that is what would apply to a property that had a very low market value because of extraneous issues. People are entitled to assess the tax themselves at a very low value and pay that low amount. I do not want to say to people that if their house has been flooded, its value is very low or that if it has not been flooded, it has a high value. They must make their own judgment. That is the essence of self-assessment. I am simply saying it is reasonable, in making that self-assessment, to take account of location factors and whether there is a market for the house. It is perfectly reasonable to reach quite a low value in that self-assessment. What is important is that if we come to challenge the assessment in due course that that self-assessment be reasonable. As I said to Deputy Kieran O’Donnell, our challenges will start where there is a wide margin between the norms for the area and the value in a particular case. If we come to challenge an assessment figure, the only question we will ask is whether the assessment was honestly and reasonably made because the presumption of honesty will apply.

Deputy Paschal Donohoe: I am thinking of a situation where one side of a road has been flooded in the past and could be flooded in the future and the other side of the road does not face that risk. I could name a dozen such roads off the top of my head. What I want to ensure is that there is consistency. If we say the tax is based on market valuation, that is what it should mean. In the case of those who face the injustice of being flooded through no fault of their own, I want to ensure the market valuation they face is one that reflects that risk of flooding, not a value that would be applied to their property in the absence of a risk of flooding. Would Ms Feehily agree that if a homeowner cannot have his or her house insured, that is a decisive factor in influencing its valuation and should play a decisive role in influencing how he or she values the home for the tax?

Ms Josephine Feehily: I would be reluctant to give the Deputy an absolute answer because some people cannot get insurance because of different factors. However, that is certainly a material factor in the context mentioned.

Deputy Paschal Donohoe: Let me restate that I am referring specifically to cases involving flooding.

[Duisigh]

Cont

Deputy Paschal Donohoe: ] In a situation where somebody has been refused insurance by his or her own insurance company and by all other insurance companies and he or she can provide material proof of that fact, will this be acceptable to the Revenue Commissioners?

Ms Josephine Feehily: Yes.

Deputy Paschal Donohoe: In terms of how this could be communicated to people - and I hope this exchange will play a role in informing people about it - is this something that can be included in the information campaign and something that can be made clear to citizens?

Ms Josephine Feehily: As I mentioned earlier, we have been developing FAQs and we can add a question about this to our FAQ database quite soon.

Deputy Paschal Donohoe: Would that then be available to the public?

Ms Josephine Feehily: Yes.

Deputy Paschal Donohoe: Within that FAQ answer, some thought must be put into the issue of flood risk. I will give an example to illustrate my point. I met a lady recently whose property has not been flooded since 1954 but a property on a road around the corner from her has been flooded twice in the last decade. She cannot get any kind of insurance for her home now. Even though she has never been flooded and is unlikely to face flooding in the future, when she goes to sell her house in the future, the market valuation for it will be the same as that for houses that have been flooded. In a situation like that, is it reasonable to include that fact in the valuation put forward by this lady and her neighbours to the Revenue Commissioners?

Ms Josephine Feehily: Yes.

Deputy Paschal Donohoe: Will that information be included in the FAQ data?

Ms Josephine Feehily: Location factors, right across the board, are material to market valuation.

Deputy Paschal Donohoe: Yes, and within that we are recognising that flood risk is a significant factor. Just to develop this point further, a large proportion of the revenue raised through this tax will be redirected to the local authorities. That is the objective of a tax like this. I hope this will result in the realisation of how gigantic an issue this is across the State, where homeowners cannot get insurance. This will be crystallised by virtue of the revenue lost to the State because of this fact. I hope this process will feed into solving this problem once and for all. There are people all over the country listening to this exchange who thought they would be paying tax on the basis of a market value that their properties simply do not have but we are establishing here that flooding risk is a germane factor in how they price their homes. The Revenue will include that information in the FAQ, is that correct?

Ms Josephine Feehily: Yes.

Deputy Paschal Donohoe: I thank Ms Feehily for that clarification because this is a really important issue for many people.

The lowest band of the property tax is between €0 and €100,000. When people are filling in the form and providing a response to the Revenue regarding the market valuation of their property, what proof must they send in?

Ms Josephine Feehily: Nothing.

Deputy Paschal Donohoe: Nothing at all?

Ms Josephine Feehily: Nothing at all. It is a self-assessment tax. What they need to put on the return is a band number. They do not need precision, which is one of the beauties of the band system. People are worried as to whether their house is worth €160,000 or €170,000 but that does not matter. It is a band system so they just put in a band number. The band number in the booklet will tell them how much they need to pay. They simply fill in the band and the amount and then return the form.

Deputy Paschal Donohoe: Then what we are saying here is that if people have proof of their inability to obtain insurance due to flooding —

Ms Josephine Feehily: — they just keep it.

Deputy Paschal Donohoe: They keep it and then they can use that to underpin the value they put forward if they are asked to provide proof by the Revenue Commissioners in the future.

Ms Josephine Feehily: Yes, if they are ever approached by us at some future date.

Deputy Paschal Donohoe: I thank Ms Feehily. That is a very helpful clarification.

In terms of people supplying information to qualify under the financial hardship conditions, I know Ms Feehily is slightly restricted in terms of what she can say at the moment. However, she made a point regarding the need for people to supply lots of information in order to meet the criteria. Is it not the case that an awful lot of the information people would need is already residing with other agencies of the State? Perhaps an example would be useful here. Let us say a person applies on the basis of a rapid decrease in income due to a situation beyond his or her control. What can happen then is that such a person becomes entitled to a social welfare payment or, if it happened in the preceding tax period, the Revenue Commissioners would have captured that data in a tax return or it would be evident, in the case of a PAYE worker, through a fall in income. Is there not a way for Revenue to gather this information instead of asking people to assemble it, particularly if the information is already held by the State? Can we not take that additional hardship off people by using the information that is already available to us?

Ms Josephine Feehily: It is important to distinguish between the deferrals and the new provision in the Bill. The deferrals are on a self-assessment basis so if people have lost their jobs last year or filled in a tax return last year, certainly they will claim a deferral on the basis of the thresholds we already mentioned and we will have that data and will risk-assess, using that data, in due course. The new provision refers to “significant” and “unexpected”. The “unexpected” part means that the data is most unlikely to be anywhere, given the prior-year arrangement with tax returns, income tax and so on. Last year’s information could hardly be regarded as “unexpected” this year. We have to work out what this provision means.

The dilemma I face with this is that I have an Act which specifies the terms under which people should pay and should get a deferral or an exemption. Now I am overlaying onto that something which is a little different but it cannot be different to what is already in the law. It cannot add to the legislation. As a Revenue Commissioner, I am not allowed to turn an exemption limit into something that is not contained in the law. I cannot turn something into a multiple of the exemption limit. It is a very narrow provision and uses language like “significant” and “unexpected” hardship. The first thing a person will have to clarify is why the hardship was “unexpected”. We will have to come up with definitions for those words and that is the guidance I am working on at the moment. With those definitions will come requests for information to support the contention that the hardship was “significant” or “unexpected”. In other words, if a person knew it last year, then it cannot be “unexpected”.

Deputy Paschal Donohoe: I have no further questions but wish to thank Ms Feehily for the clarification on the flooding issue, which is really important. I look forward to seeing the booklet that includes the FAQ response that we have discussed here.

Ms Josephine Feehily: We will put it on the website.

Deputy Paschal Donohoe: If Revenue can put that on the website and include it in future editions of the booklet, that will go an awful long way towards allaying the concerns of many residents who are already having a terrible time.

Ms Josephine Feehily: I cannot promise it will be in future editions of the booklet because they are already being printed. The logistical life-chain for 1.6 million booklets is very long but the information will be on the web.

Deputy Paschal Donohoe: I am sure the Revenue Commissioners will do their best and putting it on the website will be an important first step.

Ms Josephine Feehily: We will also get it out to community information centres as part of their training pack

Deputy Paschal Donohoe: That is really important and if we can have the information included in a future edition, that would be great.

Deputy Simon Harris: I thank Ms Feehily and her team for their attendance today. I am struck by the huge contrast between Ms Feehily’s appearance today and that of officials from the Department of the Environment, Community and Local Government in the past concerning the household charge.

[Duisigh]

COnt

Deputy Simon Harris: ] I assume a significant number of lessons have been learned as a result of how the campaign to collect the household charge was rolled out versus the implementation of the property tax. There was a situation at this committee whereby one of the most senior officials responsible for the roll-out of the household charge conceded that she had not received a letter informing her that she had to pay the household charge or the associated booklet in the post. Whatever people think about the property tax, I have been struck by the competence of Ms Feehily and her team in the Revenue Commissioners in terms of the preparation that has gone on behind the scenes, and I am grateful for that.

I wish to address some issues relating to the property tax and then I will move on to some other Revenue issues. The publicity campaign has been referred to a good deal. I presume it will take the form of television and radio advertisements. What type of publicity campaign does Revenue envisage?

Ms Josephine Feehily: It will probably not be a television campaign because that is terribly expensive and one cannot get a great deal of information out. It will certainly involve radio and local radio, which we have found to be very useful in the past for our type of messages. We will have the usual press launches and some print media involvement and so on. We have trained several people from local Revenue offices and they will be made available to local radio stations throughout the country. Much of our publicity effort will be of this quieter type and involve engaging with groups of people. Certainly, there will be print media and radio advertising.

Deputy Simon Harris: Will the Revenue use online media?

Ms Josephine Feehily: Yes, we are on Twitter.

Deputy Simon Harris: Ms Feehily had referred extensively to the valuation model that Revenue has in place. If I am living in a house and I put in an extension next year, for example, a downstairs bedroom and bathroom, in my house, is there some way the Revenue model can work that out? If I am in that scenario will I have to pay for a valuation?

Ms Josephine Feehily: The model does not get into the number of bedrooms, whether one has built a 14 bedroom extension or anything dramatic like that. We took the view that most normal extensions will be within the band. Valuers maintain that the impact on the market value of a house is not greatly enhanced by sticking on an extra bathroom. A €50,000 band gives a great deal of room in that sense.

There is another message that is important for people to hear. The valuation date is 1 May. Any enhancements or additions after that date are not relevant or captured. It is important that people do not think this should stop them from enhancing their houses in June and July of next year and the year after. The valuation date of 1 May lasts for three and a half years.

Deputy Simon Harris: If I am going to put in an extension, it would be best to wait until June or July. In the interests of public information, what is the position on the issue of proof? Let us suppose I decide to get a private valuation.

Ms Josephine Feehily: Then keep it.

Deputy Simon Harris: I should keep it rather than send it to the Revenue. Then, if Ms Feehily or one of her colleagues comes looking for it, I give it up at that stage. Is that correct?

Ms Feehily has dealt with the issue of aerial photographs. We have been hearing a good deal as well in the media in recent weeks about the snitch clause. If I buy a house from another party and that party has under-declared then I have a responsibility to liaise with the Revenue. Will Ms Feehily address this issue? There have been contrary reports in the media about it and I am somewhat confused myself.

Ms Josephine Feehily: This is largely designed as a transparency clause between the buyer and the seller. It is in the Bill and, therefore, I am somewhat constrained. It is still before the Houses. A certain amount of administration relating to the property tax must take place at a conveyance. Charges will have to be discharged and so on. In the context of the conveyance, we maintain that the seller should tell the purchaser the value he or she put on the property for property tax purposes. The purchaser will assume the responsibility from 1 November following the purchase. Presumably the purchaser will wish to assure herself that there is no bill stuck on the property because of a deferral. The issue is part of that discussion.

One thing the public debate on this clause taught me is that we need to prepare some dedicated guidance on what will happen or on the implications for a conveyance in the context of this new tax. We have not done that yet but we will get to it. That is what it is all about. It is simply because the charge continues. A new person is liable and that person must be told. To echo our earlier conversation, at that point we have a responsibility for compliance as well, whatever about the rights or wrongs of it. If someone has made a significant under-declaration, we maintain the purchaser should tell us because if the purchaser is paying a vast price for a house, it is material for her to know how the seller valued it. The purchaser will have to take up the responsibility for meeting the obligations of the tax from the following 1 November. That is the context for it.

Deputy Simon Harris: It is helpful to put that message out. Ms Feehily referred earlier to the option of paying by cash. She indicated that the Revenue was in discussion with various service providers. I presume the Revenue is in discussion with An Post.

Ms Josephine Feehily: Yes, An Post is one of them. We are almost certain An Post will provide the service. Others include the usual companies such as Payzone, PayPal and the various service providers.

Deputy Simon Harris: Deferrals and exemptions have been mentioned. Does Revenue have an estimate of the number of people who will be eligible for an exemption?

Ms Josephine Feehily: I gather the Department of Finance has, but I do not.

Mr. Des O’Leary: When we were preparing the legislation and the Thornhill report we expected an exemption and deferral range of approximately 14% to 16%.

Deputy Simon Harris: Can Mr. O’Leary break that down between exemptions and deferrals?

Mr. Des O’Leary: I do not have a breakdown of that but I could certainly provide an indication.

Deputy Simon Harris: I would be interested if the Department could do so. That would be useful. My understanding is that there will be a liability on local authority housing but that the liability will be met by the local authorities. This means the Revenue will be corresponding with the local authorities in the same way as with private owners.

Ms Josephine Feehily: We are currently in discussions. An interdepartmental group has examined all aspects of this issue. The group included the Department of the Environment, Community and Local Government. We have met some of the local authorities as well. We need to put modalities in place because it does not make sense. We have to work out with the local authorities how we will manage that relationship. It would make sense for them as well. The Bill proposes changes in that category of housing. Such houses will be taxable at a flat rate, the lowest rate. The ideal for us would be to get a list and a single amount of money.

Deputy Simon Harris: That work is ongoing.

Ms Josephine Feehily: We are still talking. The changes in the Bill are relevant in that regard because they will not be affected by the payment and filing dates this year. The Bill proposes a different arrangement in respect of local authorities.

Permit me to be cheeky for a moment. I wish to avail of a slight opportunity. Another relevant category is that of social housing associations. We have had a good deal of engagement with the representative body for the social housing associations. We are asking them to get in touch with us and to list their properties for us such that we do not write to them, but they have not all done so. We are telephoning them but it would be most helpful if those in social housing associations would tell us who they are and the names and addresses of the properties in order that we do not write to them. We have approximately two thirds of them and we have dealt with them but approximately one third have not responded. We are running a telephone campaign at the moment. Some are rather small organisations and we will keep on the telephone campaign until we begin to issue letters. Inevitably, we have made the offer but if it is not taken up, some people in those situations may get letters.

Deputy Simon Harris: That is interesting. The delegation has been here for one and a half hours. The property tax is probably the most pressing issue on the minds of the public but Revenue is involved in some other bits and pieces on an ongoing basis.

Ms Josephine Feehily: It is fairly pressing on my mind as well.

Deputy Simon Harris: I would like to get a sense from the delegation of what, if anything, is suffering in Revenue as a result of the property tax. Obviously, it has presented a significant onus or task, as outlined by Ms Feehily today, and it seems to me that the Revenue is meeting it well. I hope that I will be able to say as much when Ms Feehily is next here after the tax has been implemented. What is not being done? How is Revenue managing this within its resources? Ms Feehily referred to this issue earlier. Surely something must be suffering. Revenue must not be giving every area the same level of attention as it did before it had to put a focus on this.

Ms Josephine Feehily: I think that is true. A couple of things are suffering. We always have a pipeline of very significant information technology developments every year and obviously that is suffering.

[Duisigh]

[Ms Josephine Feehily:] Quite a number of the new things we would like to do have been moved back into next year and the year after. This is very big for us but it is not unusual for a new provision to be introduced which requires us to readjust our scheduling.

The most immediate impact has been on our IT schedule of improvements and enhancements. It has had an impact in that we have had to close down a tax district in County Clare, with the work being moved to Limerick. The impact has been solely on the counter service, not on the availability of staff to do audit and compliance work and to provide a telephone service. It has diverted some of my best and brightest from devising new policies. For example, normally at this time of the year, we would be updating our audit policy or our policies and strategies relating to PAYE. The team is instead heavily involved in the business analysis and will also be involved in publicity regarding the local property tax.

I have tried to ensure at this point that its impact is confined to new things that we would have liked to do and should be doing in order to keep ourselves up to speed. However, when the returns are sent out, the volume of business could impact on our telephone service for other taxpayers. I hope this will not be the case. We will try our best to ensure it does not. It could also impact on our debt management area. The letters will be sent out in the name of the Collector General and that office will receive the payments which will need to be processed. It could impact on collection timeliness at our end, not out there. We are doing our best to ensure it does not. I will not be able to answer that question until I see the extent. The online system is very simple. If that system helps with diminishing the confusion and volumes, the impact will be minimised.

Deputy Simon Harris: I do not expect Ms Feehily to delve into the area of policy. I refer to a story in the media which has been circulating around these corridors, that Revenue made it clear to Government officials that it could only take on one additional project this year. It was said that Revenue told Government it could not deal with any other project this year if it were to deal with the property tax. It is said the other project mentioned was to deal with child benefit. Did that discussion take place?

Ms Josephine Feehily: The discussion that took place about taxation of child benefit principally took place within the expert group on which Revenue is represented. I can say that I would have conveyed to officials in places like the Department of Public Expenditure and Reform and the Department of Finance that in the context of taking on this particular project, if they had any other projects they wanted us to do at the same time, I would want lots of notice and lots of resources. Revenue tends not to say we cannot do things. Once we have clarity about what has to be done and with enough time and some resources, we can do a lot of things. I can see how people might interpret it another way.

— The debate moves on to other points at this time.