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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 Kevin Humphreys: Information on Kevin Humphreys Zoom on Kevin Humphreys] I refer to Deputy Dessie Ellis's views on the voluntary housing sector. I question Deputy Ellis's figures. My calculation indicates that the cost per unit for voluntary and social housing is approximately €2. I am not sure how Deputy Ellis worked it out.

When this Bill passes through the Dáil next week, we will have a period in which to reflect, fine-tune and determine how the legislative mechanisms can be used fairly and productively. The proposed tax is a form of wealth tax. I look forward to hearing the Minister's response later in the debate.

Deputy Robert Dowds: Information on Robert Dowds Zoom on Robert Dowds I thank the Minister for his engagement on this matter, both inside and outside the Chamber. This Bill is one of the most important the Government will introduce and I welcome the opportunity to discuss it. As one with a keen interest in local government reform, I am particularly interested in knowing how the Bill will affect local government.

I am well aware that the Irish tend to be instinctively opposed to property tax despite the existence of the tax in pretty much every other European country. The tax has certain advantages in that it is a form of wealth tax, as Deputy Kevin Humphreys stated. This is why most left-wing parties in Europe support it. Broadly speaking, the wealthy pay the most, although I know there are some exceptions. The tax, if introduced properly, would provide an independent and stable income stream for local authorities. Transferring revenue-raising powers to local authorities would reinvigorate local democracy.

I strongly support the remarks of Deputy Brendan Ryan on homes affected by pyrite.

Since Fianna Fáil abolished rates in 1978, as one of its attempts to wreck the country, local authorities have been left without a substantial independent stream of funding. Once again, it falls to a Labour-Fine Gael Government to try to sort out the fiscal mess. Over the past decade, the absence of a local property tax contributed, in part, to the considerable property bubble. We are still dealing with the consequences of this. Fianna Fáil may attempt to attack the Government over the introduction of a property tax but I recall hearing a former Fianna Fáil Taoiseach, Mr. Brian Cowen, on "The Late Late Show" admitting ruefully that Fianna Fáil should have introduced a property tax to slow down the property bubble. Had he removed section 23 much earlier, it would have made a considerable difference. It is hypocrisy for Fianna Fáil to criticise this measure given that it agreed with the EU and IMF that it should be introduced.

I will not refer to Sinn Féin's position because everybody knows the great contrast between its views on paying local charges in Northern Ireland and paying them here.

Deputy Brian Stanley: Information on Brian Stanley Zoom on Brian Stanley One gets services in the North.

Deputy Mary Lou McDonald: Information on Mary Lou McDonald Zoom on Mary Lou McDonald One does not pay water charges-----

Deputy Robert Dowds: Information on Robert Dowds Zoom on Robert Dowds Two Sinn Féin partitionist parties.

Deputy Mary Lou McDonald: Information on Mary Lou McDonald Zoom on Mary Lou McDonald They are two different jurisdictions.

Deputy Robert Dowds: Information on Robert Dowds Zoom on Robert Dowds Having said that, I note there are some serious issues surrounding this Bill.

Deputy Mary Lou McDonald: Information on Mary Lou McDonald Zoom on Mary Lou McDonald Yes; people cannot pay the tax.

Deputy Robert Dowds: Information on Robert Dowds Zoom on Robert Dowds First, we need to be deeply conscious of the fact-----

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Could we calm down?

Deputy Mary Lou McDonald: Information on Mary Lou McDonald Zoom on Mary Lou McDonald The country is partitioned.

Deputy Robert Dowds: Information on Robert Dowds Zoom on Robert Dowds I did not interrupt Deputy Mary Lou McDonald when she was speaking.

Deputy Jonathan O'Brien: Information on Jonathan O'Brien Zoom on Jonathan O'Brien He does so every morning during Leaders' Questions.

Deputy Robert Dowds: Information on Robert Dowds Zoom on Robert Dowds We need to be deeply conscious of the fact that a high proportion of our population is either unemployed or affected by unsustainable debt. For this reason, deferrals of property tax for certain categories of people are essential. I welcome the deferral system, as laid out in Part 12 of the Bill. However, I ask the Minister to examine this again because there are inadequate provisions for those in serious mortgage arrears. We cannot get blood out of a stone. I support the Minister's not applying property tax for the first three years after the purchase of a house by a first-time buyer.

An issue arises regarding social housing. I suggest that all social housing, whether controlled by local authorities or housing associations, be valued in the lowest band. In other words, one would pay €90 for a full year, thus easing the operation of housing associations and the burden on low-income tenants.

We must ensure balance across urban and rural areas. I will not make my points on this matter because I largely concur with the remarks of Deputy Kevin Humphreys on the subject.

There are two sections on which I want to focus, namely, sections 20 and 157. There is a case for considering a greater local adjustment factor than that of approximately 15%, for the reasons alluded to by Deputy Kevin Humphreys. I ask the Minister to consider whether a 25% local adjustment factor might be more appropriate given the considerable gap between certain rural and urban areas. I say this although I accept we must have some equalisation measure.

It is very important that the proportion of the property tax that will go directly to the local authority be written down in black and white. In the Minister's speech, he referred to the Thornhill report and to 65%. Why is this not written into the legislation? I suggest the figure be higher than 65%. I ask the Minister to consider this seriously. To have this legislation accepted, it must be seen as fair. As presented, I do not consider it fair in regard to the division between urban and rural areas.

Deputy Jonathan O'Brien: Information on Jonathan O'Brien Zoom on Jonathan O'Brien The Deputy should vote against it so.

Deputy Robert Dowds: Information on Robert Dowds Zoom on Robert Dowds With regard to section 157, I am greatly concerned that the property tax revenue, as with motor tax revenue, will go directly into the Central Fund. I would like the proportion to be given to councils to be given to them directly. Central government should have no say in how the local authorities allocate it.

As one can gather, I favour property tax, but I strongly believe the Bill is flawed. For it to succeed in the longer term, we should have more time to consider it. I agree with the Opposition in that regard. I ask that we not rush the Bill through next week.

Deputy Peter Mathews: Information on Peter Mathews Zoom on Peter Mathews The sum of €3.5 billion is the start of this problem. The troika states we can operate according to our own sense of justice and equity but that we must make a saving of €3.5 billion. We have all accepted that. In principle, all things being equal, a property-based tax to fund local services is acceptable in normal circumstances. We are not in normal circumstances, however, but are trying to turn a tanker in a very short period. When doing so, one looks to the strongest shoulders. As the Minister, Deputy Noonan, will know from our internal meetings, I propose that there be, for three years, a national recovery levy on high incomes, namely, incomes in excess of €120,000. I stipulate €120,000 rather than €100,000 in the interest of families. Stability and support for families have been eroded over the past 15 years, initially with the individualisation of taxation. This is a sinister form of taxation that is anti-family. Erosion has occurred in other ways although I cannot elaborate on them now.


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