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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 Éamon Ó Cuív: Information on Éamon Ó Cuív Zoom on Éamon Ó Cuív] This tax will be equally cyclical. Therefore, there is no benefit in having the wider basket of taxes if what the Minister is trying to do is create stable sources of income. The difference between this tax and rates is that the rates tax was largely immune to the cycle because it was purely the choice of those setting it.

Deputy Seán Kyne: Information on Seán Kyne Zoom on Seán Kyne Fianna Fáil got rid of rates.

Deputy Éamon Ó Cuív: Information on Éamon Ó Cuív Zoom on Éamon Ó Cuív With great support from Fine Gael. It was the prerogative of those involved to fix the rate. Therefore, there was no automatic collapse as property prices collapsed.

I hate it when some people accept the perceived wisdom without analysing it. The perceived wisdom is that because every other country has something, we must have it too. Who says every other country is right? Who says taxing family homes is a good way to go? To be honest, if the Government had stated it was going to exempt family homes but was going to place a levy on all fire and theft insurance policies on personal property over a certain value - Rembrandt paintings, jewellery and yachts - I would have said that was a fair idea because these are not necessities of life but luxuries. However, what it is doing is taxing the family home and in doing so it is hitting families.

One of the things that has made Ireland a very stable society has been the high rate of ownership of the family home. I have argued with local authorities and my colleagues when in government about this issue. Recent policies brought forward by officials in the Department of Finance and accepted by some politicians have consistently tried to undermine this aspect. I accept that local authority policy makes provision for the RAS and other such arrangements for those who do not have children. However, I do not accept that type of policy in the social housing sector for people with children because too often in my career as a politician I have seen the upset caused when people are moved from place to place and from house to house and when children must change schools and so on. We all know the more stability families have, the better it is for society. I do not agree with the elimination of the assistance we have been providing for first-time buyers of houses, particularly where children are involved. We must face up to the fact that with regard to the stability quotient, it makes a significant difference when children are involved. I have always been opposed to forced or induced apartment living where children are involved. If we seek outcomes for society to give our children a chance, these issues are important. However, what has the Government done? It is totally anti-children. Let us recall, for example, three areas that it has hit. It has hit struggling families straight between the eyes in the budget. In the case of child benefit, the bigger the family, the bigger the hit. I always remember the total lack of understanding on the part of the Minister for Finance, Deputy Michael Noonan, when he asked me, when I was Minister for Social Protection, what I had got against the third child in a family. The reason he asked that question was that I was not willing to do what the Government has done, that is, hit the third and successive children with a double decrease in one year. His comment to me in 2010 showed that he did not understand the system of child benefit. Therefore, the policy now is to hit children and the more children there are in a family, the harder they are hit.

The Government is hitting the same families with the property tax and and the changes to PRSI. This is a double hit when two parents are involved in rearing a family. This is the wrong way to go. Philosophically, we should be making houses affordable. However, we are imposing a property tax at a time when, as Deputies on the Government side have rightly pointed out, people who bought houses during the property boom paid large sums in stamp duty.

I wonder how much this will add to the bank bailout costs. There are 168,000 mortgages in arrears, or one in five. Now the Government is looking for the people affected to pay another €300 or €400. If they cannot pay their mortgages, they cannot pay this tax. What choices are they meant to make? They must choose between Revenue or the bank coming after them. There is the old saying that one cannot squeeze blood out of a turnip. Therefore, something will have to give. If the people concerned do not pay their mortgages, the banks will get into even deeper trouble and be able to lend even less money to productive enterprises and the Government will have to provide the money. If the people concerned do not pay the tax, the Government's arithmetic will come apart and Revenue will have to prosecute them.

A surprise element of the proposal was not made clear on budget day, that is, that local authorities must pay the tax on all rented local authority houses, with a few exceptions. Local authorities tell us that they do not have the money and that the only way they will be able to raise it is by upping differential rents. Anyone in a local authority knows that differential rents are already pitched at what is considered to be the highest amount that can reasonably be charged for a house for a family. Are local authorities to increase differential rents, or must the deficit of city and county councils increase? Sooner or later that chicken must come home to roost.

This is an ill-conceived tax. It is not required by the troika. If I want proof that it could be changed, all I need do is think of the extraordinary triumph of the Governmentin its first few weeks after coming to power, a triumph of which it continues to remind us. It is one I am happy it achieved in that it succeeded in raising the minimum wage. It proved its mettle at the time. It proved it could do the job and that if the bottom line was correct, the troika did not really care how the figures were achieved. The troika only cares about the bottom line and if the Government comes up realistic alternatives, it will accept them.

We brought forward a number of socially progressive alternatives in our alternative budget. We suggested a levelling off of the USC for employed persons to the same level applicable to self-employed persons on incomes over €100,000. That would still leave employed persons, compared to the self-employed, with a significant advantage in terms of the employee allowance that does not apply to self-employed persons.

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