Mar 302012



ICMSA Submission


To The


Inter-Departmental Group




Property Tax











March 2012




The submission will follow, insofar as it is feasible, the structure suggested for submissions.


There are six identified elements in the terms of reference.  It is not intended to make any submission with regard to the first which refers to the immediate financial requirements of the EU/IMF programme.  While this submission is primarily with respect to farm dwellings it will endeavour to cover all other elements of the terms of reference.






The Property Tax


This term is not defined in the terms of reference.  The only indication of a definition is that it is intended to replace the Household Charge.  It is taken in this submission that the term Property Tax is in effect and is confined to Residential Property Tax.  If that is not the case, it is our view that it should be the case and our submission would be totally different if the Property Tax applied to other property in addition to residential property. For clarity, it is thus taken that the Property Tax envisaged shall not apply to any agricultural land or farm buildings and that appropriate apportionment  formula are applied to cater for residential dwellings on farms. An outline proposal for such apportionment is given below.



Urban Areas / Rural Areas


The methodology used by the CSO to categorise an area as either urban or rural would seem to be appropriate, at least as the basic categorisation grid.  The details of the categorisation are contained in the Annex.

Determination for Property Tax


The proposal from the Commission on Taxation, namely, a tiered Property Tax based on the value of the house, would seem to have a lot of merit.  The valuation would be self assessed by the property owner.  The Commission on Taxation has proposed an eight band tiered Property Tax.  While we would broadly concur with this there are two essential or desired adjustments that should take place.  First, the increase in the Property Tax from one band to the next should be proportionate unlike the proposal from the Commission on Taxation, where, for example, a house with a value of €151,000 would have double the Property Tax compared to a house with a value of €149,000.   Secondly, we would favour a house with the market value (or adjusted market value, see below) below €150,000 having a standard amount of tax.  In addition, given that valuation is self assessed, we propose that there would be a safety zone of a least 20%.  In other words, that there would be no penalty of retrospective claim if the valuation was not lower than 20%.  With respect to valuation clearly it must be market value as distinct from replacement value or insurable value.


With respect to ease of determination and uniform application and to take account of changes in the value of residential property at National or Regional level, it may be appropriate to standardise the value as per base year and use an index in subsequent years to adjust the values.  Indeed, this methodology was part of the Capital Gains Tax code when account was taken of increased valued due to inflation.  The standardisation of value based on a base year plus an annual adjustor is used in England for Residential Property Tax.



Modified or Adjusted Valuation for Farm Dwellings


Arriving at the value of the dwelling on a farm (or indeed dwellings) account must be taken of the special nature of the farm dwelling. Clearly the value of the farm dwelling is lower than the value of an identical property taken in isolation from the farm. It is necessary to introduce a statutory apportionment and various approaches can be adopted. Essentially, a farm dwelling will have restricted value arising from access issues, nuisance factors, restricted services and planning restrictions. The nuisance factors are considerable and would call for a substantial discount on the value of a farm dwelling.



Adjustment for Residential Property in Rural Areas 


In addition to the adjustments described in the immediate above paragraph, a further adjustment is required for all dwellings in rural areas (farm dwellings and non -farm rural dwellings).


In the terms of reference, the purpose of the Property Tax is to provide a stable funding base for the Local Authority sector and, in addition, the Group is tasked to insure the maximum degree of fairness between and across urban and rural areas.  Thus, it is our firm view, that a rebate on the Property Tax should apply to dwellings in rural areas which have a lower level of Local Authority, or indeed, public utility services.  Indeed, the rebate could be graduated to take account of dwellings in cluster development in rural areas as distinct from individual or isolated farm dwellings.


For example, rural areas do not benefit from public sewage connections or public lighting.



Phased Payment


ICMSA favours phased payment, but not necessarily a uniform phased payment on, for example, a monthly basis. Account should be taken of cash flow pattern of business and in particular, farming, which has a marked seasonal pattern of flow with virtually all the positive cash flow occurring in the last two months of the year.




Local Authority Responsibility and National Parameters


We believe that the appropriate balance of Local Authority responsibility and Central Government directions dictates that a Local Authority would be prohibited from fixing a rate of Property Tax above a level set by Central Government and that Central Government could fix a rate at a lower rate than set by a Local Authority for all, or part of, the area of the county having regard to the level and or quality of the service provided in all or part of the county area.






































Based on CSO Definitions – Rural and Urban Areas




There are many different territorial divisions of the country of which the most important are described below.




The enumeration of the census is carried out, in the first instance, by townlands in rural areas and by streets in urban areas. The townland is the smallest territorial division used for administrative purposes.



Electoral Divisions (EDs)


The smallest administrative area for which population statistics are published is the Electoral Division. In rural areas each Electoral Division consists of an aggregation of entire townlands. There are 3,440 Electoral Divisions in the State.


The term District Electoral Division was changed to Electoral Division by Section 23 of the Local Government Act, 1994. S.I. 196 of 1996 refers.



Town and Rural Areas


Electoral Divisions are aggregated to give Towns (or cities where appropriate) and Rural Districts which, in turn, build up to counties. The Rural districts, which numbered 160, were abolished as administrative areas in 1925 (in the case of Rural Districts in County Dublin, in 1930) but have been retained for census purposes as convenient units of area, intermediate in size between Electoral Divisions and Counties.



Counties and Cities


Under the Local Government Act, 2001 (S.I. 591 of 2001), the areas formerly known as County Boroughs are now called Cities. Areas formally known as Municipal Boroughs are now called Boroughs. The area of North Tipperary Riding and South Tipperary Riding are now known as North Tipperary and South Tipperary, respectively.






Towns with legally defined boundaries consist of:


(1)               five cities;

(2)               five boroughs;

(3)               75 towns.


Under Section 62 of the Local Government Act, 1994 (S.I. 171 of 1994), the following six towns ceased to have town status: Callan, Fethard, Newcastle West, Rathkeale, Roscommon and Tullow. The Towns Improvement Act has now ceased under the Local Government Act, 2001 (S.I. 591 of 2001). Under this act the areas previously known as Urban Districts are now called Towns, as are the 26 towns which were formally towns under the Towns Improvement Act.



Regional Authorities


Eight regions were established under the Local Government Act, 1991, Regional Authorities Establishment Order, 1993 which came into operation on 1 January 1994.


Two further Regional Authorities to be known as Regional Assemblies were established in 1999 under the Local Government Act, 1991, Regional Authorities Establishments Order, 1999 (S.I. 226 of 1999 refers). The two assemblies are based on the Existing Regional Authority Structure and are as follows:




Name of Region                                               Constituent Local Authorities



Border, Midland and Western                           County Councils of Cavan, Donegal, Galway,

Regional Assembly (BMW)                              Laois, Leitrim, Longford, Louth, Mayo,

Monaghan, Offaly, Roscommon, Sligo and

Westmeath and Galway City Council.



South and Eastern Regional                               County Councils of Carlow, Clare, Cork,

Assembly (S&E)                                              Dun Laoghaire/Rathdown, Fingal, Kerry,

Kildare, Kilkenny, Limerick, Meath, South

Dublin, North Tipperary, South Tipperary,

Waterford, and Wicklow and the City

Councils of Cork, Dublin, Limerick and