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Finance (Local Property Tax) Bill 2012: Committee Stage (Resumed) and Remaining Stages (Continued)

Tuesday, 18 December 2012

Dáil Éireann Debate
Vol. 787 No. 3

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(Speaker Continuing)

[Deputy Joe Higgins: Information on Joe Higgins Zoom on Joe Higgins] A home is not a productive asset. Its upkeep costs a great deal of money. In particular, it costs for those who have mortgages, even more so for those in negative equity.

Regarding the chargeable value, the Minister tried to make a virtue out of the fact that the price of homes had fallen dramatically since the top of the bubble. This is no consolation to the hundreds of thousands of householders trapped in the nightmare of negative equity. It reminded me of a clash I had with the former Taoiseach, Mr. Bertie Ahern, in 2006 at the height of the boom. Having met a young worker and partner who had just paid €375,000 for a new modest, three-bedroom home, which was the going rate at that time, and were on a 40-year mortgage, a banker worked out for me that, at 4%, they would pay €750,000 before they would be clear of their mortgage. It seems a long time ago, but it was only six years ago, which means that there are 34 more years of that mortgage to go. If they survive, which I hope they do, they will be in their 70s.

That massive millstone around their necks was caused by speculation and profiteering to which Fine Gael never once raised its voice in opposition. Now, the Government is landing a property tax on top of them and calls it progressive. I must say that the Minister's concept of fairness is upside-down, and his belief that it is fair to crucify someone on the dole with this new property tax is incredible.

The Minister made a conscious decision as to whom he would hit. The troika, being representatives of European big business, big bankers and the financial markets, would not contemplate extra taxes on that sector despite the fact that accumulated uninvested profits in the eurozone amount to €3 trillion. These are the assets and profits that should be taxed to fill the hole.

In response to me, the Minister suggested that a 2.5% increase in corporation tax would raise €675 million. We have another model that would suggest significantly greater amounts if the effective tax rate was as it should be. Although there were and are alternatives, the Minister did not choose the fair option, but a grossly regressive situation.

The Minister stood up tonight and sought, by invoking Revenue, to terrify decent, ordinary taxpayers who in their hundreds of thousands opposed and boycotted the household tax because it was their understanding that not only was it fundamentally unjust but that it was also a bailout tax to help bondholders and bankers. The Minister's legislation smashes the pretence of a broadening of the tax base, which I am amazed that he has again tried to justify despite the fact that, in the same breath, he referred to Revenue being in charge of collecting it and putting its hand into exactly the same pot of workers' incomes or social welfare to pay this tax. The Minister must give up this pretence, yet he sought to terrify. It is clear that he is relying on fear to try to coerce people into swallowing this injustice.

In a democracy, the Government should fear the people, not the other way around, but there are states that are stronger than fear. A sense of injustice and indignation is stronger than fear. People rightly have that sense, given what has been done to our society by a tiny cabal that is being legislated for week after week in this Chamber to bail it out at the expense of low and middle income earners. The inability to pay is stronger than fear. The Minister's cynical view that people's opposition will simply melt away like snow because he waved Revenue in front of them will prove a costly miscalculation for him. The Government and Revenue will rue the day that they took this course of action. They are entering into territory where they have never been.

Deputy Shane Ross: Information on Shane P.N. Ross Zoom on Shane P.N. Ross Hear, hear.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt I call Deputy Donnelly. I ask Members to keep their comments brief. I cannot force them to do so, but there are many speakers and little time.

Deputy Stephen S. Donnelly: Information on Stephen Donnelly Zoom on Stephen Donnelly I support the amendment. In fairness, I give the Minister ten out of ten for style - it was a good reply - but probably a bit less for substance. His reply went to the heart of the concern held across the House, one that has been echoed by his backbenchers. He stated that this was a tax on assets, but it is not. That is the problem. Let us keep using the example used by Deputy Pearse Doherty. The purchase price of a house was €250,000 and its market value is €60,000, but what is the asset? The asset is the loan, the €250,000 that the bank owns. If we are to tax the asset, let us tax the bank. In fact, the bank owns the house and the additional €190,000.

The Minister mentioned the Thornhill report and that this tax was based on it. However, the report's recommendation was not a rate of 0.18%. As the Minister knows, it was 0.1%, a little over half of what this tax will accrue. Critically, the Thornhill report recognised the issue of stamp duty, the tens of thousands of euro already paid by people, many of whom are now in negative equity and who do not own the assets on which they are being taxed. I would be pleased if the Minister considered some of the other recommendations in the Thornhill report, for example, halving the rate, recognising stamp duty and considering the asset.

The Minister eloquently deconstructed the Title to the Bill and I accept that it is a tax on property. However, I disagree with him on "local". I can use my situation as an example. I rent where I live in Greystones. I will not need to pay the tax there, although I would do so. Like other Deputies, I am paid a very good wage for what I do. I would pay the tax to Wicklow County Council because my family and I use services provided by it, but I will not need to pay.

I own an apartment - rather, the bank owns an apartment with my name on it - in Dublin. I will pay on that Dublin property, which I do not live in, and I will not pay on the property in Wicklow, which I do live in. I will pay on negative equity in Dublin. This goes to the heart of the bizarre nature of and technical flaws within this legislation. I would not have a problem with paying a local government tax in Wicklow as a resident of Wicklow who is on a decent income, but I will not be required to do so.

I thank the Minister for his reply to my question. He stated that the amendments would be dealt with, but they will not be addressed tonight. Rather, they will be dealt with as part of the finance Bill. When he mentioned the elements that would be addressed, he did not mention negative equity.

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