Revenue legally allowed to deduct tax from accounts

 

The Revenue Commissioners can legally deduct money from the bank accounts of individuals if they do not pay the property tax, the Public Accounts Committee has heard.

Chairwoman Josephine Feehily said that those who did not opt in to one of the six payment options would have the property tax deducted at source from their salary, pension, social welfare payment or bank account.

“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 . . . and the financial institution will be asked to deduct that money and remit it to us,” she said.

Attachment orders

Ms Feehily added that all these measures were set out in the Local Property Tax Act 2012 or elsewhere in tax law, adding that the attachment orders in relation to bank accounts were a “normal part of our tool kit”, which Revenue already used a number of times a year.

An 8 per cent interest rate will apply to those who do not pay the property tax.

The Revenue Commissioners will begin sending letters, including guidelines on property valuations, to 1.6 million householders from the second week in March. They will take four weeks to issue.

The correspondence will include a valuation estimate based on the average indicative value of the property.

Ms Feehily said this value would be based on a representative sample of prices, taking into account criteria such as whether a property was detached or semi-detached or in a rural or urban area.

She said the cost of the implementation and administration of the property tax was budgeted at €25.9 million.

Although the property tax is currently estimated to cost 2 per cent of the expected yield from the tax for the next two years, Ms Feehily said it was expected that this would reduce to less than 1 per cent from year three onwards.

She told the committee that Revenue had acquired geocodes for every property in the State from a private company which used satellite technology to identify and map every property. Revenue then merged this geo-directory with its own databases.

Ms Feehily said social welfare recipients who fell below the income threshold could apply for a deferral of the tax.

“Utter lunacy"

However, Mary Lou McDonald said one did not need to be “a mathematical genius” to figure out that the vast majority of those on social welfare payments would not be in a position to pay this tax “now . . . next year or the year after”.

She said it was “utter lunacy” that the only relief those on social welfare could avail of was to defer this tax to later, for which the State would levy a 4 per cent interest charge.

Property tax Payment options

Taoiseach Enda Kenny says homeowners will have many options for paying property tax before the Revenue Commissioners resort to deductions from wages or social welfare payments.

The half-year property tax for 2013 is due on July 1st. At a Microsoft event in Dublin yesterday, Mr Kenny said “deductions at source” would only happen after an extended period of non-compliance.

He said the range of opportunities for people to comply with paying the tax, “half of which will be eligible for this year”, was very significant, “be it through direct debit or be it through cash or be it through a whole range of facilities”.

He said the Revenue Commissioners had enormous authority over the years and had been very good at doing collections.

“Going after the social welfare payment or deductions at salary are the end of the process.”

All local authority and voluntary housing association homes will be put into the valuation band for properties worth up to €100,000, the lowest of the bands. MARY MINIHAN