Property tax reform report outlines options

A report on possible reforms to the property tax has outlined a number of options on changing the levy, such as staggered increases over a three-year period.

It is understood that while the report from Dr Don Thornhill does not favour any specific way to deal with changes to the tax, Minister for Finance Michael Noonan is likely to freeze the amount paid by homeowners until 2018.

Mr Noonan has said he will not allow for any steep rises in the property tax and will announce specific proposals in October’s budget.

The rate of property tax paid by homeowners from 2013 to 2016 was based on how houses were valued on May 1st, 2013, with a revaluation due in November 2016. Government backbench TDs have raised concerns that rising property prices in Dublin in the past number of years could lead to significant increases in the tax.

The property tax payable by homeowners is based on the value of the home and rises in bands, with the first band up to €100,000 and rising every €50,000 thereafter.

Mr Noonan commissioned Dr Thornhill, a former public servant, to conduct a review of the tax.

Sources said Dr Thornhill outlined a number of possible changes and outlined the positives and negatives of each but did not make specific recommendations.

His suggestions included: taking the average valuation between 2013 and 2016 and using that as the basis for a new level of property tax; having a staggered increase over a three-year period after 2016, although this is seen as impractical; widening the bands from €50,000 to €100,000 in an attempt to limit the property tax increase for homeowners and limiting the number of bands a homeowner could jump to two.

Dr Thornill also proposed a two-year freeze on valuations until 2018, the favoured option of Mr Noonan, who also considered a freeze before last year's budget. Sources said Mr Noonan's reason for choosing to freeze the tax at 2013 levels is to allow the tax to bed in with the public. Any future reforms of the tax will have to be dealt with at that stage, sources said.

Ministers have repeatedly flagged that they would not allow big increases in property tax just months before the general election.