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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 Joe O'Reilly: Information on Joe O'Reilly Zoom on Joe O'Reilly] In listening to Sinn Féin they will be aware that it supports the average £1,000 per annum property tax in the North. They will also be aware that Fianna Fáil accepted the concept of a property tax in the EU-IMF deal and that in its alternative budget which was not costed by the Department of Finance it proposed the continuation of the household charge which it laterally stated was unfair. The reasonable bystander will also be aware that the Members on the back benches who purport to be socialists are being contradictory in opposing the first reasonable attempt in a long time to establish a progressive form of taxation, one which has some relationship to property, wealth and so on, is a feature of virtually all modern democracies and vital in any meaningful form of local government. It is an appalling position to be in for people who propose to be left wing. It is accepted by the OECD, the ESRI and the Commission on Taxation that this form of taxation to reach our targets is the least threatening to employment. It is the safest option in our attempts to retain jobs. The bands are reasonable in that the bulk of people, whom Members on the benches opposite purport to represent, tend to live in houses worth €200,000, in respect of which the property tax next year will be only €112.50. In a full year it will be €225 and in 2014, €315. Homes worth more than €200,000 - let us be reasonable and fair - are in different terrain.

Deputy Michael Lowry asked how people would know how much they were to pay. There will be a direction from the Revenue Commissioners in this regard. The reason a site tax would not be inequitable is that there could be a mansion with a swimming pool, etc., on one site, while on the adjacent site which would be of the same value, there could be a modest dwelling. We will never have real local government until local government can raise revenue, which will be ultimate outcome of the introduction of this tax, is accountable to the people for how it spends revenue and until such time, as in the case of America and most other European democracies, as there is a relationship between local services and local taxation gathering.

While this proposal is not perfect and will require tweaking and monitoring, it is an attempt to achieve a progressive system of taxation and give teeth to local government. It is a real attempt at equity in that the lower bands are unthreatening. We are all aware that people are enduring hardship. That is not being questioned.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett The Deputy is over time.

Deputy Joe O'Reilly: Information on Joe O'Reilly Zoom on Joe O'Reilly In this House we have a moral responsibility to face up to the facts. We are either going to correct the finances and give future generations an opportunity or squander it on the face of opportunism. The responses of the Opposition have been hugely hypocritical.

Deputy Anthony Lawlor: Information on Anthony Lawlor Zoom on Anthony Lawlor I must ensure in the future that I do not follow Deputy O'Reilly.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett The Deputy is wasting time.

Deputy Anthony Lawlor: Information on Anthony Lawlor Zoom on Anthony Lawlor When I was young, I often accompanied my father who was a rates collector when he went to collect rates in Kilcock. Everybody paid them, regardless of whether they were living in a local authority house, on a farm or in a large property in a rural area. They were collected on behalf of the local authority and spent by it. People want to be assured that whatever they pay to the Revenue Commissioners will be paid over to the local authority in their area. As stated by Deputy O'Reilly, it is important that there be a connection between the person paying for services through his or her taxes and the local authorities.

I would like to raise a couple of issues with the Minister. I have tabled an amendment to section 133 which deals with executors of wills. The Bill, as drafted, provides that an executor must pay the property tax, even though he or she might not be a beneficiary. Perhaps the Minister might consider allowing the executor to defer payment until such time as the will has been dealt with.

Another issue of concern to me is that people living in housing estates who, like those living in apartments, pay management fees in respect of street lighting, internal sewers, repairs to footpaths, water systems and so on. These issues are not addressed by local authorities. Perhaps the Minister might consider an exemption for people living in estates already paying management fees in respect of repairs.

Despite the rhetoric of the Opposition, people throughout Europe pay property tax. It is extremely difficult to listen to Sinn Féin speak against the introduction of a property tax here while it supports such a charge in the North. Those socialists who have expressed their opposition to the introduction of a property tax here are at odds with their brethren elsewhere in Europe. I welcome the introduction of the property tax, in respect of which some tweaking will be required in the future.

Deputy Eoghan Murphy: Information on Eoghan Murphy Zoom on Eoghan Murphy While I understand the property tax has been designed in this way because it is, perhaps, the most efficient and effective way to collect it, I regret that I do not agree with it. Looking at it from a perspective that would be different from that of the Revenue Commissioners and from the point of view of reform of local government, the introduction of local service charges for households, thus shifting some of the burden from local businesses in bridging the democratic deficit at the local level, and from an urban perspective, I would not have designed the tax in this way. I admit, however, that I have not been able to design a property tax that would meet all of the necessary requirements. In that regard, I note the proposals brought forward by the Dublin Chamber of Commerce, in particular its idea of banding rural and urban properties together.

  No one likes paying taxes. However, they are an essential element of the social contract. It is important to recognise some truths in this matter, even though they might not fit with the agenda that some in public life are trying to promote. In this economy those who earn more pay more, which is how it should be. We have a larger social transfer of wealth in this country than in any other European country, from the higher to the lower paid. This is achieved through the income tax system. We should not now be providing for a fiscal transfer from urban areas to rural areas by way of a national property tax as this undermines what is already being achieved through the payment of income taxes. Also, it poses a danger to social cohesion and is unfair.

  While we want property prices in general to rise in order that some of those in negative equity can be lifted out of it, we do not want a return to the mentality of the past, when booming property prices were seen as a sign of progress and the property market was taken as an indicator of economic and general prosperity. There is a risk that levying this tax on the perceived market value of a property may do this. There is a further risk in relying on a tax designed in this way as a stable source of revenue, as we did in the boom years because it will be pro-cyclical and, in a recession, will lead to an impact in terms of declining government revenues, as happened recently.

  On the particulars of the tax, we should attempt in some way to take into account those who in recent years paid stamp duty.   This would only be fair, given the significant amounts paid.

  On the concept of a mansions tax, this additional levy is not justified, as it is not based on the size of the property or its state of repair. It is notional and a penalty for which there is no real economic justification. It is grossly unfair to people living in Dublin who may be paying much more than those living outside the capital on a far smaller property. This also applies to the lower levy, not just the mansions tax.

  On deferrals and exemptions, more work needs to be done in this regard. I support Deputy Anthony Lawlor's amendment on the executors of wills. As for occupiers, I they, not only the owner, should bear part of the burden.

  I have corresponded with the Minister on this issue on a number of occasions this year. He knows where I stand on the matter. While I will support him in his decision on this matter, I will continue to work constructively to try to address some of my concerns with the current design before the tax is introduced. When it is implemented, we should move immediately to reform it to have a proper local services charge, to be raised locally and administered by the local authorities, one which would reflect the real costs of providing services for the people who use them.

Deputy Heather Humphreys: Information on Heather Humphreys Zoom on Heather Humphreys I welcome the opportunity to contribute to this debate. Having considered the Bill, I would like to raise three specific issues which have been raised with me by my constituents in counties Cavan and Monaghan.

  Will consideration be given to people living alone who have no source of income other than the State pension?

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