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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 Maureen O'Sullivan: Information on Maureen O'Sullivan Zoom on Maureen O'Sullivan] A site value tax would have been a better and fairer way of assessing value.

Any measure of taxation should be based on ability to pay. The unfortunate fact is that we have the highest number of non-working households - that is, households without a working adult. We also have the highest level of household debt in the OECD. One in five mortgages is in distress and some organisations tell us that more than half of all adults have less than €100 in disposable income per month. The phrase "like taking blood from a stone" comes to mind.

Let us consider how this tax is supposedly fair. Supposedly, those who own the most valuable properties will pay most. This aspect is being lauded as one of the measures that will hurt the wealthy. However, it is reckoned that only 1% will be liable for the so-called mansion tax. Those in urban areas will pay significantly more for their houses than those with similar houses in rural areas. Older people with small pensions may be marginally above the income threshold of €15,000, which, I believe, is far too low. It is welcome that there is an exemption for people who, for reasons of old age, physical or mental disability or other causes require special accommodation. I believe the exemption should cover local authority housing tenants and tenants in the non-profit social housing sector. Housing associations are exempt in European countries and such bodies and local authorities should be exempt, as recommended in the Thornhill report, because they are in involved with people in low-income families.

In fairness, Dublin City Council has been keeping within budget, but this tax will undermine that. The council cannot impose it on its tenants, who are already struggling to pay their rent and trying to cope with other cuts, including child benefit; the privatisation of waste collection in Dublin Central has also resulted in increased charges, as predicted. Some tenants will come under the special exemption but for other tenants on similar incomes it will not be enough. There are extensive housing needs in Dublin Central. The housing associations are doing tremendous work but imposing this tax on them means certain projects might not go ahead. Clúid Housing Association has striking new plans in Cabra for senior citizens' housing but that might stop and it could affect the budget for maintenance of properties as well.

How can the Government expect people in homes affected by pyrite to pay this tax? Their homes are structurally defective and one cannot get a mortgage to buy a house with pyrite. These people who have already paid stamp duty are expected to pay a property tax as well. I notice that the budget for homeless services will be maintained at 2012 rates. However, the homeless services in Dublin maintain they have increasing demands. They cannot do the same amount of work for more people on the same money as last year.

Deputy Luke 'Ming' Flanagan: Information on Luke 'Ming' Flanagan Zoom on Luke 'Ming' Flanagan I listened to the speech of the Minister for Finance, Deputy Noonan, this morning and I thought it was interesting how he contradicted himself. Someone put it down on paper but no one seems to have spotted that he contradicted himself. He said:

The introduction of a property tax has been a condition of the programme since it was first negotiated in November 2010, under the previous Fianna Fáil Government. It has remained a condition of the programme following subsequent reviews which are agreed by all programme partners.

He did not wait for a couple of pages before contradicting himself. He contradicted himself in the next paragraph. He continued: "It is true that the Government has some scope within the programme to use alternative methods to achieve programme targets." How can it have scope if it has no choice and there is a condition? To say there is scope to use alternative methods suggests it could do something else. The Government has admitted that it could do something different but at the same time maintains it cannot because it would affect people in other ways. The reality is that the Government could bring in different types of taxation. The Minister said that we could increase taxation on the incomes of people who can afford it.

  It must have been said here 1,000 times if it was said once that the credit union survey clearly shows that 1.8 million people have less than €100 left at the end of every month after paying their main bills. If the Government imposes this tax on people it will cripple them. Whatever about crippling them, certainly it will damage local businesses because people will not have money to spend on local businesses. Who will be hit? The local authorities will be hit because the businesses will not be able to pay rates.

  The most important part of this debate relates to where this money is spent. A hard-up person who has no money left will have to pay money over to a local authority - in my case, one in which the county manager - a nice man, in fact, a gentleman - gets paid more than the Prime Minister of Spain. There are four chief fire officers in County Roscommon, costing us the guts of €450,000. By contrast, there are three chief fire officers in New York City. One might make the case that we are stuck with them, but guess what? We lost one of them in the past year. Guess what we did? We took on another one. Is this where we should be spending our money?

  The Minister referred to accountability but he is not ambitious about how accountable the tax will be. He said the measure will provide local authorities with significant responsibility for raising local revenue and that this has the potential to increase the level of oversight. It has the potential but it will not fulfil the potential. I will tell the House exactly what will happen. If the Minister demands in future, even under the new local government system, that the local authorities do not waste money, what will happen to him is what happened to me several times. They will not lift the telephone to him in future. They will not fill the potholes that should be filled. They will blank him and close his local swimming pool for one month in the summer, although it has been there since 1945, and they will boot him around the place. That is not accountability. Whistleblowers should be held aloft in this country and praised, but under this system they get a kicking. No one should put any more money into that system. I believe in local taxation but it must be done right and this is not the right way to do it. The Government has dirtied the name of local taxation forever, which is a crying shame.

Deputy Joan Collins: Information on Joan Collins Zoom on Joan Collins It has been said already that this is not a property tax. No matter how many times the Minister says otherwise, this is a tax on the family home and it will be known as a tax on the family home forever. That is what people will call it rather than a property tax. It is crazy situation given that there are large numbers of distressed mortgages. Some 1.8 million households are living on €100 per month after bills have been paid. Up to 100,000 families are languishing on the social housing lists. The imposition of a tax of €3 million per year on social housing associations will cause problems. The Government and the local authorities have abdicated any responsibility to provide social housing in the coming period. This tax will impair the ability of local authorities to maintain the services they currently provide or to purchase new homes. Moreover, the housing associations will have to pay a further €90 per house to the Private Residential Tenancies Board. That will put considerable pressure on these groups in the economy.

It is a tax on low and moderate incomes. There is a section in the Bill giving powers to the Minister for Social Protection in order that tax can be deducted from welfare or State old age pensions. This is an amazing achievement by the Labour Party. It is the first time in the history of the State that welfare payments and the old age pension will be subjected to taxation. It beggars belief. It is a tax on jobs. Every euro taken from the pockets of people on low and moderate incomes reduces spending demand in the economy. Austerity is crippling the domestic economy. This measure along with the cuts to child benefit and the increase in PRSI will leave the average family with €1,000 less per year, up to €20 less per week or €80 less per month. A person struggling on €100 per month after bills are paid will be wiped out with this measure.

The Government spin on income tax is a joke. Whether a person's income is reduced by income tax or stealth tax is neither here nor there. One is still hit with the extra tax in one's pocket. This is the same pocket that the Government is dipping its greedy little hands into again and again. What is the Government trying to do to people? Is it really trying to bleed people dry? This is the view of ordinary people.

The Minister has repeated the neoliberal mantra that a tax on high incomes is a tax on jobs but there is no evidence whatsoever to back up this claim. During the height of the post-war boom, a period of high economic growth and relative full employment, there were high taxes and high incomes, especially in the United States. After taking tax advice from the multinationals - there is no trick beneath them to avoid taxes - the Minister said he was concerned that some well-paid executives or bankers might not want to live here. What about the more than 200,000 young, energetic and gifted people who want to live here but who have been forced out of the country because there is no work for them? The attempt to portray the measures as somehow progressive or as some form of wealth tax is an insult to our intelligence. The Government can railroad this through the Dáil but it will be met with mass opposition, as were the measures on septic tanks and the household charge. I will do everything I can to mobilise ordinary people to oppose and defeat this tax and the budget in general. This is nothing more than another attack on ordinary working people on behalf of the rich.


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