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News : Irish Last Updated: Mar 11, 2013 - 9:09 AM


Monday Newspaper Review - Irish Business News - - March 11, 2013
By Finfacts Team
Mar 11, 2013 - 9:03 AM

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The Irish Independent reports that homes with vastly different market values have been bunched together in the new Revenue Commissioners guidelines on the property tax, fuelling confusion over the controversial charge.

The online guide has been criticised for being too vague to help people, and could result in some homeowners paying the wrong rate of tax.

And the Irish Independent has discovered a series of discrepancies which show how homeowners face a much more difficult task than expected when valuing their homes for the tax.

It means that owners may have to carry out – or pay for – detailed research into what their homes are worth or run the risk of being fined up to €3,000 by Revenue for underpaying.

This is because the Revenue Commissioners has banded together homes with widely varying market values. In one town of more than 15,000 people, all semi-detached homes agreed as being worth between €150,000 and €200,000, regardless of the number of bedrooms or size of the garden.

However, sales data shows three houses with one, two and three bedrooms sold for different prices last year.

This would result in annual tax bills ranging from €404 in a full year to €224 – a difference of €180 a year.

Revenue has warned that homeowners must self-assess the tax, and will be liable if the tax is underpaid.

Fianna Fail finance spokesman Michael McGrath said the guide could lead to "more confusion", and could result in people overpaying.

"People were hoping it would give an accurate guide, and I am fearful that some will rely on the prices given for their area but those guide prices could result in them over or underpaying the tax due to the Revenue," Mr McGrath added.

"You would have to wonder how useful it is for people who are struggling to come up with an accurate valuation.

"If Revenue published indicative prices for an area, and were willing to accept valuations based on those, the entire initiative would be meaningful, but issuing guidance and then saying it's up to taxpayers to come up with an accurate valuation really undermines the entire process," Mr McGrath said.

"People can either rely on it or not. I think they can't, and if the guidance is misleading the homeowner will pay the price."

Householders who underpay their tax face being hit with fines of up to €3,000. If there is an overpayment, the excess will be refunded.

Some 1.66 million householders will be hit with the charge from this summer.

The Government expects to raise €500m in a full year, and expects more than 80pc to register by the end of the year.

The tax is levied at 0.18pc of the value of the property, up to a market value of €1m.

Expensive properties will be assessed at 0.18pc up to €1m, and 0.25pc on the portion of the value above €1m.

The Revenue Commissioners defended the online guide, saying it was designed to be used by the homeowner to calculate their tax bill.

It also warned people to take into account any "exceptional" features of their property – including large gardens or house extensions – which could inflate its value. If it was in a poor state of repair, the value could be reduced, which would lead to a lower tax bill.

People who relied on the guidance – which included consulting Revenue's guide, the Property Price register and examining valuations – would not have their bill challenged. Deliberate under-valuations would be investigated.

"Self-assessment requires you to honestly assess the value of your property. If you follow Revenue's guidance honestly, your valuation will not be challenged," a spokeswoman said.

"However, if you feel that the guidance is not indicating a reasonable valuation for your property, you should make your own assessment. Revenue will challenge cases where deliberate under-valuation occurred. You are responsible for ensuring that you choose the correct value band for your property."

Dubious

From next year, dubious claims will be probed, the spokeswoman added.

"We expect (the Local Property Tax compliance programme) will focus on valuations which deviate significantly from the average value for the relevant property type and geographic location."

Owners will be able to check property values in their area on www.revenue.ie.

The valuations are based on a variety of sources, including the recently established property price register, the An Post geodirectory and stamp duty data. Other information, such as the 2011 Census results and 1,300 independent valuations carried out for the Revenue, were also used.

Payments must be made from July 1.

The Irish Independent also reports that the Government is signing up the country's best business brains to independently advise on the rollout of its jobs creation policies.

A group of six leading business people from domestic and multinational companies will join the team tasked with ensuring the Action Plan for Jobs is implemented.

The group includes the Irish boss of a US tech company who has been critical of the education system's failure to produce skilled workers.

The six business people will also sit on a revamped body that recommends ways to improve the country's competitiveness.

The group includes Louise Phelan of Paypal, John Herlihy of Google and Heather Reynolds of Eishtec, along with three others to be confirmed this week.

The appointments of the industry partners are expected to be confirmed this week by Jobs Minister Richard Bruton.

The addition of the business people is intended to inject some private sector experience into the plan but also to give an added push to ensure the targets are met.

Aside from attending the meetings of the monitoring group, it is also expected the group of six will get to brief the Cabinet committee on jobs.

The Irish Times reports that mortgage lenders will run the risk of financial sanctions if they fail to meet Government targets in a new plan to overcome the personal debt crisis.

The plan, to be unveiled on Wednesday, includes last-resort measures to facilitate the repossession of property from home owners deemed to be in “strategic default” if they do not co-operate with their lenders.

This is designed to prompt borrowers who can repay their loans but who won’t do so to engage with their banks. The aim is to separate them on a case-by-case basis from borrowers who genuinely cannot repay, and to settle such cases quickly.

Tone of remarks

The matter is politically sensitive. The tone of remarks on repossessions by Department of Finance secretary general John Moran last week went down badly with some Cabinet members.

However, a senior Government source said there was a clear understanding among all stakeholders that the arrears question should be urgently addressed. The objective was to keep people in the family home “where it’s at all possible”, the source said.

There is support for the initiative within the EU-IMF troika. The view within the troika is that the task of settling genuine arrears cases would be made much more difficult if strategic defaulters are not tackled.

Increased pressure on the banks to confront tens of thousands of mortgage arrears comes in a week in which Revenue starts writing to 1.66 million home owners with estimates of their property tax liability. It will take four weeks to complete the delivery of letters to all properties.

A new Revenue web page on the tax went online yesterday, setting out valuation estimates on homes throughout the State. Valuations scrutinised by The Irish Times were perceived to be at the conservative end of the scale.

The new plan to confront the mortgage crisis aims to remove an incentive for the banks to postpone the definitive settlement of arrears cases, a practice known as “extend and pretend”.

Current rules enable banks to avoid taking a financial loss on mortgages which are in default but which have yet to be formally restructured.

Under the new plan, the Financial Regulator will compel lenders to recognise such losses up front if they do not meet targets to restructure a set number of loans in arrears every three months. Banks would have to set aside capital against such losses, weakening their financial position.

The objective is to encourage banks to put arrears customers in a sustainable position for the long-term, moving away from interim measures like forbearance on repayments or interest-only arrangements. The target number of cases to be settled every three months by each institution will increase in steep increments.

The prospect of further penalising unco-operative banks by preventing them from reducing future corporate tax payments by offsetting liabilities against past losses was discussed within the Government. Such measures, however, are likely to be held in reserve this week.

New regime

The new regime will apply to the two State-supported pillar banks, Allied Irish Banks and Bank of Ireland, and all other mortgage lenders active in the Irish market.

It is likely to include provisions to give the banks increased scope to make contact with customers in arrears. High-level bankers have been complaining in private that current rules allow only four “contacts” per month.

The Irish Times also reports that the Irish-owned Doyle Collection hotel group received $90 million from the sale of its Back Bay hotel in Boston in mid-February, The Irish Times has learned.

US-based Loews Hotels & Resorts acquired the 225-room, four-star hotel in Boston from the Doyle chain. The sale price was not disclosed at the time of the deal.

The hotel has been converted to a Loews Hotels brand and the New York- based company has announced plans to spend $8 million renovating it.

The Doyle Collection put the Boston hotel on the market late last year through estate agent CBRE after receiving unsolicited approaches.

It is understood there was keen interest in the property and the price achieved was considered strong. The Back Bay is a leased hotel that has been operated by the Doyle Collection since 2004.

The lease was acquired in 2002 by the former listed Jurys Doyle Hotel Group, a predecessor to the Doyle Collection.

Jurys Doyle paid $20 million for the lease and invested $45 million in redeveloping the former Boston police department’s headquarters.

The Doyle group is also selling two of its three hotels in Washington DC – the Marriott Courtyard Hotel and the Normandy Hotel. It plans to retain ownership of the Dupont Circle Hotel in the US capital.

The sale processes for these hotels are “progressing well” with “strong interest” in both, a source close to the company said. The Doyle group is expected to redeploy the proceeds of these sales to bolster its position in the London market, where it already has three large four-star properties.

The company, controlled by the Doyle and Beatty families, must complete a refinancing of its debt later this year.

Latest accounts for Doyle Hotels (Holdings) Ltd show that it has bank debt of ¤331.2 million, which falls due for settlement in November 2013. The company had net cash of ¤27.9 million on its books at the end of 2010. The Doyle Collection operates 10 properties in Ireland, the UK and the US. These include the five-star Westbury in Dublin and the four-star Croke Park hotel.

The Irish Examiner reports that members of the European parliament will play a pivotal role in the reform of the EU’s Common Agriculture Policy when they debate and vote on the proposals tomorrow and Wednesday.

Amendments, will fix the parliament’s mandate for the negotiations to follow with the Council, represented by the Irish presidency and Agriculture Minister Simon Coveney and his team.

However, the lobbying will continue up to the end, as the parliament’s Agriculture and Rural Development Committee has voted down many of the reforms devised by the European Commission, coming much closer to the position of some of the member states instead.

This will be the first time that the European Parliament will have equal say to the member states in agriculture, but some of the committee’s decisions are splitting the MEPs and many decisions are expected to be very tight.

Environmentalists such as the World Wildlife Fund are critical of the MEPs’ move against efforts to ensure that agriculture is more environmentally sensitive in the future. and point out that one move that would result in double funding for farmers is in fact illegal.

Rather than the new policy promoting greening or environmentally enhancing policies, they will intensify funding of the same polluting farming, said WWF director Tony Long.

“Many MEPs on the COMAGRI supported the reduction of greening measures, voted for the illegal double funding measures, and the reduction of cross compliance measure, want the continuation of a money for nothing ethos that rewards large farmers regardless of the impact they have on nature,” said Mr Long. “Currently 20% of all recipients received 80% of all funding. This unjust distribution is set to continue if the EU parliament votes through these measures.”

Independent MEP Marian Harkin has warned that, in the absence of any commitment to pillar 2 funding, which is for rural development, the focus had to be on how the Single Farm Payment would be distributed in the reform of CAP.

The terms “active” and “productive” farmer had yet to be defined, but a farmer with 20 cows could be just as active and productive as one with 200 and needed a fair allocation of the SFP, said Ms Harkin.

Mr Coveney has already said that there would not be a dramatic redistribution in a short space of time, as had been originally proposed by the European Commission, between big and small farmers.

Today, the chairs of the Agriculture and Fisheries Committees from the parliaments of the EU member countries are due to meet in Dublin Castle to engage with EU commissioners Dacian Ciolos and Maria Damanaki and with Mr Coveney on the future of the CAP and common fisheries policies.

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