The European Commission has said the self-assessed nature of the property tax may give rise to some homeowners undervaluing their properties.
In an internal report reviewing Ireland’s performance under the four-year international bailout, Commission staff has acknowledged that the rationale for self-assessment has stemmed from the absence of a comprehensive register of updated property values.
“A valuation based on such register should be established as soon as the latter is in place,” it has advised.
In addition it has also concluded that the one acre cap on the size of taxable land linked to the the property tax – as well as the exclusion of other land properties – has reduced the base -and the potential revenue - of the tax.
It has noted that the use of bands of €50,000 by the Revenue Commissioners will make it easier for them to spot large undervaluations.
The report states that the course now appears firmly set to introduce water charges for domestic users in early 2014, broadly in line with the programme.
There have been some suggestions from Government sources in recent months that it may try to delay the introduction of the charges until late 2014 or early 2015 but his report seems to downplay that scenario.
The report does note that “significant uncertainty” still surrounds the future level and structure of water charges.
“Public acceptance will require that a fair and equitable structure of charges be devised on an assessed as well as as on a metered basis, as the two systems will coexist until the installation of meters is competed (which could take up to three years),” the report says.
The paper says the Legal Services Regulation Bill should completes its passage through the Oireachtas as quickly as possible. This Bill was introduced as far back as October 2011 but its progress has been stalled by divisions between the Government and the legal profession over the independence of the new regulatory authority; legal costs and training.
The delay has also been attributed to the lack of personnel to draft the huge volume of legislation which is planned and in train.
"Given the importance of this reform in relation to the high legal costs in Ireland adequate progress should be achieved in a timely fashion."
The staff paper has estimated that the deal on the promissory note will have a cumulative benefit to the Irish economy of about €30bn with €1bn boost (or 0.7 per cent of GDP) from 2014 on. It has also referred to the significant political benefits as a result of IBRC being liquidated.
It does not a number of potential risks including a possible temporary impact on the 2013 deficit from one-off costs associated with the transfer of assets from the IRBC to Nama.