2025-12-09

2. Deputy Ged Nash asked the Tánaiste and Minister for Finance the details of and timeline for the production of legislation to empower the Revenue Commissioners to implement the proposed new derelict sites tax; if all of the revenue collected will be disbursed to the relevant local authorities; and if he will make a statement on the matter. [65023/25]

A welcome announcement at least was made in the budget in October that this Government would plan to transfer responsibility for collecting derelict sites levies to the Revenue Commissioners and, from then on, the levy would be known as a tax, given the fact that it would be collected by the Revenue Commissioners. This is a welcome development and something for which I have been campaigning and advocating for many years. One of the key things in this regard is that the revenue collected ought to be dispersed directly back to the local authorities involved. The Minister might advise on the position in that regard and what he plans to do to legislate for this announcement that was made in budget 2026.

I thank Deputy Nash for the question. First, we share the same view on the importance of this derelict property tax. In a housing emergency, which we are in, every lever must be used. Having a tax that targets derelict properties is an important one. There is a significant body of work to do, however. I do not say this to in any way cast aspersions but I am conscious that local authorities will have an important role in this regard because when you are moving from a levy to a tax, the importance of consistency will be really important in being able to underpin any tax collected by the Revenue Commissioners. As the Deputy said, in this budget we announced the introduction of a new derelict property tax. The aim of this tax is to encourage the activation of derelict properties and sites. In fact, not having to collect much money from this tax would ultimately be a good thing if we can change behaviour and get derelict sites and properties back into use. This will replace the derelict sites levy and it will be collected by the Revenue Commissioners. In order for the new tax to be successful on introduction, care has to be taken in its design. A key issue is that the tax must apply in a consistent manner to all residential properties and sites that are derelict. Therefore, a lead-in time will be required for our local authorities to identify all the relevant derelict properties in their areas for inclusion on a register in a consistent manner. I intend to legislate for the derelict property tax in 2026. This is dependent on engagement from stakeholders. It will also be influenced by any advice I receive from the Attorney General. The timeline of bringing in the legislation in 2026 is necessary to allow local authorities to prepare and publish a preliminary register of derelict properties in 2027, with the tax coming into effect as quickly as possible thereafter. The yield from the derelict property tax will accrue to the Exchequer. That is the current intention. As the Deputy will appreciate, replacing the current levy with a new tax is a complex process. There is much detail that remains to be worked through regarding the operation of the new tax. I will be in a position to provide further information over the course of next year in advance of the tax being legislated for. I genuinely look forward to engaging with Deputies on the design of the tax through the legislative process.

There is concern at official level in local authorities that it may not be the case that the revenue collected will be dispersed directly back to the local authorities where the subject sites are present. The Minister will understand those concerns. I draw some analogies between the transfer of the household charge, which the Minister will recall from the early 2010s, to the local property tax and how compliance improved. In fact, the transformation of the household charge to the property tax was quite successful from a collection point of view, looking at the compliance figures compared to the collection of the household charge, which was the responsibility of the local authorities at that point in time. It was for good reason that responsibility was transferred. It was done expeditiously and efficiently in a short period of time. Given the fact that we have derelict sites registers available to local authorities across the country, although they may need to be finessed, I do not accept for a minute, given the urgency of this matter, that we ought to wait until 2027 until Revenue has responsibility for collecting these charges.

I appreciate the past examples. I remember soldiering on some of them together in past iterations of government. We need to get this right, however. My predecessor announced that timeline on budget day. I think we will all agree that we actually do not want to collect much revenue from the tax. Rather, we want people to take derelict properties and sites and put them back into use. The purpose of making the budget day announcement, albeit with the lead-in time, was to make it clear to people in this country that if they are sitting on a derelict property or site in a housing emergency, we intend to tax that reality. We intend to do it through the Revenue Commissioners because, as the Deputy rightly said, the Revenue Commissioners are good at collecting tax. That is what we intend to do because, in a housing emergency, we cannot tolerate this situation. Currently, the derelict site levy is an annual levy of 7% of the land’s market value. While the rate of the derelict property tax is yet to be determined, I will say to the House that it certainly will not be lower than the current 7%. The primary goal will not be to raise revenue but, rather, to encourage owners of derelict properties to bring them back into use. We want to do this as quickly as possible but we also have to make sure it is consistent with all the principles expected in a new tax.

The Minister will know how this works. He will know about the ineffective nature of the Derelict Sites Act and the need for reform in that space. When a local authority identifies an owner of a derelict site or property and, after due process, decides to place that site on a register, the individual may decide to contest that. It then becomes complicated. He or she may potentially challenge the designation of a derelict site through the courts and communities become frustrated. Dereliction itself is an absolute scourge, regardless of the housing disaster we are experiencing at the moment. It is a public health matter. In fact, the Scottish Administration has designated dereliction as a public health issue, and for very good reasons. The reality is that the Revenue Commissioners are the best-placed agency to collect a levy that will be transformed into a tax for a number of different reasons. Any business owner I know needs to sweat every asset they have. If it is a case that somebody is wealthy enough to be able to preside over a derelict site without using that site to generate some revenue, they must have very deep pockets. Of course, if Revenue is collecting your tax and you are not compliant, then you cannot run your businesses. I get what the Minister is saying in terms of that disincentive piece, which is important, like the vacant homes tax. It is not about collecting tax; it is about incentivising use. I ask and urge the Minister to look again at ensuring the revenues generated and collected are returned to local authorities like the local property tax, by and large.

I genuinely am eager to engage on the design and construct of the new tax and we will have an opportunity to do that through the legislative process. I do also genuinely take the point around the urgency of this, and the Government genuinely does too, but we also have to just make sure we get it right. I am conscious there are local authorities around the country that do very a good job and that are also very busy. This is quite an important and big project for them because we have to have a consistency in terms of this. It cannot be a case of County Wicklow doing one thing in relation to a derelict site levy and County Louth doing another. That is a levy collected by the local authorities. Once this becomes a national tax there has to be that consistent approach. I agree with the Deputy about dereliction and the housing emergency, absolutely, but dereliction more broadly is a real issue. We will get to some of this later as well, but this is why we have made some changes, for example with the living cities initiatives and the like to try and bring derelict properties back into use, particularly on main streets with over-the-shop schemes as well.