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Finance (Local Property Tax) Bill 2012: Second Stage (Continued)

Friday, 14 December 2012

Dáil Éireann Debate
Vol. 786 No. 4

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(Speaker Continuing)

[Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath] That is deeply unfair. The principle of exemptions is established in the Bill. The Minister is exempting people who buy a new house now or who will buy a property in the near future. If Fianna Fáil did that, it would be said that it was a bailout for builders and developers. However, the Government is doing it. It is exempting people who are supporting the construction industry by way of purchasing a property, but it is not exempting people who simply cannot afford to pay this tax. The reality is that many people will not be able to afford to pay it.

I note the Minister does not propose to carry over directly the list of estates currently exempt from the household charge. He is going to draw up a new list which takes account of factors listed in the legislation. I hope it is done in a much fairer way than the current list has been done because we can all cite anomalies in our constituencies of estates that are not exempt that should be. There are examples of estates also that are substantially complete but where an exemption is currently afforded.

Some of the powers extended to Revenue by way of the Bill are draconian. People in receipt of social welfare as their sole means of financial support could well have an undefined amount deducted from their weekly payment on foot of the property tax. Similarly, the Minister is placing an onus on employers who are currently administering the payroll system to deduct the property tax from people on PAYE.

We oppose the Bill. We believe it is fundamentally unfair. It is regressive and will hit low and middle income families and people on social welfare. The Bill does not take into account in any meaningful way one's ability to pay or net wealth. That is what is at the core of the debate. That has been the essential failure of Government in framing this idea. It is the wrong tax at the wrong time. The country cannot afford to bear it and the Government must go back to the drawing board, look at some of the constructive suggestions we made in our submission, and not proceed with the tax.

Deputy Barry Cowen: Information on Barry Cowen Zoom on Barry Cowen Let us make no mistake, this steam-rolled Bill is the moment when thousands of families across the country, already struggling to make ends meet, are pushed over the edge. It is the moment when Fine Gael and Labour put another nail in the coffin of their own credibility, as they betray yet another pre-election promise to the Irish people. It is the moment when the domestic economy is dealt yet another staggering blow as it struggles to its feet. It is simply the moment when the Government introduces the wrong tax at the wrong time. Fianna Fáil is opposed to the introduction of this deeply unfair property tax on the family home. The Government's proposal for a property tax will hit struggling home owners at a time when they can least afford it. Now is simply not the time to inflict an unfair property tax on a struggling economy, weak housing market and home owners working just to keep their families afloat.

  It is important also to rubbish the lines peddled by desperate Ministers attempting to avoid responsibility for their decisions. That has been going on all week. The property tax is a political decision by the Government which breaks its pre-election promises. It is not written in stone by the EU-IMF programme of financial support. Our meetings with the troika have clarified that it is only interested in the bottom line of fiscal adjustment, not a rigid set of proposals. The choice to introduce a property tax is being taken by the Government, and no one else, instead of other options at its disposal.

  As my colleague Deputy Michael McGrath said, Fianna Fáil has put forward a fully costed budget proposal based on data from the Department of Finance that does not hammer home owners with a property tax and meets our budget adjustment requirements. The Government has chosen, for example, not to introduce a 3% increase in the universal social charge, USC, for those earning more than €100,000. Instead, it has opted for spin over substance with a "mansion tax" gimmick that has all the depth and research of an idea that somebody in the Labour Party office read about in the Financial Times the weekend before the budget and decided to cut and paste it.

  For ordinary families who will find themselves paying an average of €315 on a standard three-bedroom home, all the half-baked plagiarism in the world will not help them balance their already struggling family finances. For them, as my colleague Deputy Michael McGrath has alluded to, the only regret they have is that it was not a copy of the Fine Gael manifesto or the Labour manifesto that was available to the Cabinet when they came up with this half-baked idea. Instead, they had a few crumpled copies of the Financial Times, as they scoured for a desperate measure to cover up the clear breach of their promises with a direct tax on the family. The Government decided to hit family homes. It decided not to provide meaningful exemptions for low-income families. It decided not to help the thousands laden down with mortgage arrears. It was the Government, and no one else, that made the decision in that regard.

  This is a tax that will be sharply felt across the length and breadth of the country. For example, in my home county of Offaly where property prices are lower than the national average, ordinary families will still be harshly penalised, at the worst possible moment, for working hard and building up a family home. These are families that are struggling in the middle of a recession and battling against mortgage arrears. Figures released by the Central Bank yesterday show that almost one in four family home mortgages are either in arrears or have already been restructured. That confirms Fianna Fáil's view that the introduction of a property tax at this time is a major mistake. The reality is that 180,000 mortgage holders are experiencing difficulty in repaying the mortgage on the family home. These people will now be hit by a hefty charge on the same family home. One could ask what is the logic behind introducing a property tax on people already struggling to pay the mortgage. The truth is that a huge number of families will simply not be able to pay the property tax.

  Last year, in similar circumstances, the Government rammed the household charge Bill through without proper scrutiny and it quickly descended into a farce. There was the botched implementation of the charge and the failure of the information campaign, the insufficient range of exemptions and the wide-scale boycotts that had all the hallmarks of a poorly conceived and dreadfully executed charge. Those who do not learn from history are condemned to repeat it and the Government has once more decided to push a Bill through without giving this House adequate time to scrutinise it. One could ask whether we will, once more, see the small details coming to the fore and undermining the Government and the Bill. For example, the decision by the Government to impose the property tax on local authority housing goes directly against the advice of the Thornhill report. Even last year's botched household charge had an exemption for social housing. More than 130,000 homes across the country are rented from local authorities, some 1,700 in County Offaly. Those families will see their annual rents hiked up to pay the tax but thousands of local authority homes are already in rent arrears. For instance, Dublin City Council is owed more than €20 million in overdue rents. Those tenants are people whom the State needs to support in order to provide adequate, reliable accommodation at an affordable price. Yet the Government is hitting them with a rent hike they simply cannot afford. The local authority in question will be left to pick up the bill and in the same way as happened following the household charge fiasco, local services will suffer.

  The much hyped financial independence of local authorities that the Minister for the Environment, Community and Local Government, Deputy Hogan, has spoken about will be badly damaged by a housing section that becomes an increasingly unsustainable burden on council revenues. Voluntary housing associations, on which the Government has placed great emphasis for the future provision of social housing and to tackle the 100,000 long waiting list, will also be hit by the tax.

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