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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 Phil Hogan: Information on Phil Hogan Zoom on Phil Hogan] The politics of realism of so many people have prevailed over the politics of scaremongering and intimidation. The people who advocated against it have been roundly defeated by the law-abiding citizens of this country.

People who have paid the charge are right to ask what about the people who have not paid. Those who have not settled their household charge liability by 30 June 2013 will pay an additional €200 in addition to their local property tax liability. Already, we have witnessed a major increase in household charge compliance since the announcement that the local property tax will include outstanding household charge liabilities. Approximately 5,000 households per week continue to register for the household charge and the percentage of non-compliant households continues to reduce. A 70% compliance rate in the first year of any new charge represents a significant achievement. It is all the more notable when compared to the historic experience of compliance rates with other more established forms of taxation. I know Deputy McGrath, as a student of accountancy would understand that better than I would.

In its paper No. 98/20, the tax strategy group found that in 1987-88 approximately 60% of income tax payers filed returns for the financial year in question and that just 43% of companies filed returns of corporation tax by the due date. It is also interesting to note that since 1988, Revenue introduced a self-assessment system and tax compliance rates have improved dramatically.

I accept that in these difficult times €100 is a lot of money for anybody to have to pay and I applaud the majority of people who are mindful, despite the difficulties they have, of the need for compliance and that we have a 70% compliance rate so far. In this day and age, I do not expect people to pay money to local authorities without reform of local government. In the document I published some weeks ago, I set out clearly a more effective and efficient way of delivering local government services and of how in doing so we should be mindful of the fact that people who contribute locally expect no more nor no less than that from their elected representatives and their national government.

It is appropriate to reflect on some of the debate going on in the context of exemptions. With the household charge, we reflected on the difficulties people have, especially the vulnerable, and significant exemptions were made, particularly with regard to local authority and voluntary housing, for people on mortgage interest supplement and people in nursing homes and mental institutions. Vulnerable people in our community were not liable for the charge. I met a lot of people protesting outside my office and offices of other Deputies who were not liable for the charge at all. Perhaps the information campaign was lacking in some way so that people did not realise that.

I established a group under the chairmanship of Dr. Thornhill which went through the issues in regard to a local property tax in detail. All the details on what that group examined are on the website and can be accessed. It is not easy to come up with a system that will please everybody. The group looked at a lot of systems, including at a site valuation tax, a system which has been advocated. However, I do not know of any other jurisdiction where it has been implemented, so there is not a model we can go on that would be fair or progressive. Market value, whether we like it or not, brings up all of the various issues relating to the location of the dwelling and amenities it does or does not enjoy.

The diverse services being provided by local authorities must be maintained, such as road maintenance, libraries and fire services, but these are often taken for granted. As a member of a local authority for 21 years, I was often frustrated by the fact that the authority continually had to write to the relevant Department to seek moneys for various projects. Now local authorities will have the opportunity to vary the tax at local level, from 2015 - after the local elections - by plus or minus 15%. Hopefully, councillors will be responsible and be able to deal with the variations in value they see in their areas.

The democratic nature of a local property tax is something we have again now, having been abolished in 1977 by Fianna Fáil. We will watch how it develops over the next couple of years, in terms of local government funding. The relationship between local and central government must change. We cannot have a system of local government that is top-down. We want to see a bottom-up approach, where people will have access to funding for services and in terms of the authority of those democratically elected members of local authorities.

The issue of exemptions was mentioned by various Deputies, particularly for people on high mortgages. We have proposed a voluntary deferral scheme, which will provide for a situation where people with mortgage difficulties can have that recognised and be permitted to defer payment for a period of time. The same will apply to people on low incomes and social welfare.

The tax on property will be efficiently collected through the Revenue and the default position of the Revenue Commission will be that the tax will be deducted at source in the event it is not paid voluntarily. The introduction of the local property tax is an advance towards our national economic recovery. It is an advance towards giving people discretion at local level to provide services, without having to seek permission from national Government. Revenue from the tax will be put to good use and it is up to local authorities and local councillors to make sure that is the situation.

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