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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 Seán Kyne: Information on Seán Kyne Zoom on Seán Kyne] Other than setting commercial rates and, in recent years, water charges for farmers and businesses, we relied on the local government fund and grants. Motor taxes went to the Central Fund. The report of the commission on taxation recommended that at least 86% of total expenditure at local level should be raised locally. It is accepted that it was a mistake to increase income tax in the 1980s because it became a tax on jobs and investment. A local tax, as long as it is progressive and ensures those with the most expensive properties pay most, is the fairest system.

The context for this debate is the EU-IMF programme, which includes the introduction of a property tax. It is a requirement of the programme that we widen our tax collection sources. Furthermore, we are overspending as a country and the gap between revenue and expenditure has to be narrowed, with €1.5 billion more required per month. We have to look for alternative methods of raising money. Fianna Fáil negotiated and accepted the property tax as part of the troika deal.

Deputy Éamon Ó Cuív: Information on Éamon Ó Cuív Zoom on Éamon Ó Cuív That is incorrect.

Deputy Seán Kyne: Information on Seán Kyne Zoom on Seán Kyne That debate is well known.

Deputy Alex White: Information on Alex White Zoom on Alex White Get the document.

Deputy Éamon Ó Cuív: Information on Éamon Ó Cuív Zoom on Éamon Ó Cuív I have the document.

Deputy Seán Kyne: Information on Seán Kyne Zoom on Seán Kyne We have debated this issue in the constituency which Deputy Ó Cuív and I share. Last year Fianna Fáil opposed the flat rate household tax but now it wants to keep that tax and oppose this more progressive tax. There is a slight contradiction in that approach.

Sinn Féin's policies in the North differ from its approach in the South. In a partitionist policy, it supported increases of 10% to household rates between 2011 and 2014, with charges amounting to more than £1,000 at present.

It is right and proper that the Revenue Commissioners be charged with collecting this tax. While it is important to debate the principles of the tax, once any new tax is levied, it is important that democratically elected Members uphold the law of the land. When the household charge was introduced, Deputies refused to pay it and encouraged others to do likewise. Revenue has the power to collect this tax because it is, after all, the State's tax collection body.

While I have sympathy for Deputies Mitchell and Mitchell O'Connor, local property prices reflect the area in which one lives and the services available locally. For example, in urban areas there are footpaths, lighting and access to publicly funded municipal sewerage schemes. These are not necessarily available in rural areas. People in rural areas have also paid stamp duty and taxes on the construction or purchase of their houses. They may not have paid as much but they do not get as much in return. For this reason, I agree with the proposal to allow local authorities to set the local property rate after 2016. Authorities in which expensive properties are located will probably be able to reduce local tax rates by 15% or more as we move towards a less centralised system.

Everything must be paid for either by direct taxation or through local charges. The Putting People First document on local government reform is worth reading in this regard. With greater local collection of charges it will be more necessary to monitor local government and budgets. The people who elect their councillors will have the power of scrutiny and through this and other checks and balances they will be able know what their local authorities are doing in return for the money they receive.

Deputy Catherine Byrne: Information on Catherine Byrne Zoom on Catherine Byrne The local property tax is important for supporting this economy and allowing our country to emerge from the current recession. The previous Government took the easy option of hiding the property tax under the carpet. It did not have the courage to introduce the tax because it knew it would be crippled in election. The people saw what happened in the dark, however, and they made the decision to put the country in the hands of a Government which is willing to make the hard decisions to turn the country around.

The system of levying tax according to the value of a property is a fairer and easier way of collecting local taxes. This is the norm in other parts of the world, including in Northern Ireland and Great Britain, where people pay property taxes in return for services. The payment arrangements are fair and there will be a choice of payment by instalments, from pensions or through social welfare. It is preferable to operate a system in which people can contribute by instalments rather than require them to make a one-off payment.

It is also fair that, in respect of the household charge, the Revenue Commissioners will have the opportunity to bring some of that money back into the country's coffers. People who paid it in the past were annoyed that many others did not get to pay it. Deputy Mattie McGrath told us to speak to our constituents. I speak to my constituents all the time. I am not asleep on this issue. People believe it is their duty to the State to pay taxes. They do not want anything for nothing and they certainly do not want a handout.

The Deputies opposite who encourage people not to pay this tax should remember they are the beneficiaries of State expenditure. Election to this House brings responsibilities and requires courage. Several years ago the campaign of opposition to council waste charges created chaos in our communities, brought on the privatisation of waste collection and left people with huge outstanding bills. Deputy Joan Collins stated that she would stand with the people. She did not stand with them when they could not pay the arrears on their bills. They came to my office to ask me to intervene with the local authority to relieve them of their arrears. If she is going to stand with the people this time, she will have a huge bill on her hands once she finishes. It is hypocritical that Members refuse to acknowledge the bigger picture of the future for our children and grandchildren. It is time Deputies stopped sending negative messages to communities in which people are willing to pay charges. At every public meeting it is the same round-up of cowboys and indians.

Deputy Éamon Ó Cuív: Information on Éamon Ó Cuív Zoom on Éamon Ó Cuív I welcome the opportunity to tease out the principles and options we face in respect of this issue. Deputy Kyne stated that the proposed tax will provide a stable form of revenue. I am sure Deputy Mathews, who is a good man with figures, will agree that if we had levied property taxes based on market prices at the height of the boom the revenue derived from it would be two to three times greater than the amount that could be taken this or next year. Property prices have, of course, collapsed. The idea that the tax as formulated by the Government is somehow more immune to the variations of the economy than any other tax is rubbish. As currently proposed, it will be totally cyclical and as the market for houses improves, the revenue from it will increase, but if the market collapses in the future, it will collapse.

The collapse in revenue on the capital tax was relatively small. If that was all that we had lost we would not have a problem. The collapse in the big three of PAYE, PRSI and VAT receipts caused the wider crisis in the public finances. Other taxes in which there was a percentage collapse may be more easily identified as connected to the collapse but the loss of income to the State was from the big three.


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