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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 Stephen S. Donnelly: Information on Stephen Donnelly Zoom on Stephen Donnelly] He did not mention ability to pay or regional variations either, the latter of which might, according to Deputy Olivia Mitchell, lead to revolution in Ireland.

  I will conclude with two observations which are relevant to Deputy Doherty's amendment. On Second Stage of the Bill, colleagues and I spoke about the inability to pay issue and the stress that will be placed on households as a consequence of the measure set out in this legislation. We referred to people coming into constituency offices and indicating that they were suicidal because they could see no way to meet their debt obligations. As Deputy Joe Higgins observed, people in that situation will now owe an additional debt to the Revenue Commissioners. It is bad enough to owe money to the bank; one certainly does now want to be in hock to Revenue. The Personal Insolvency Bill will be of no assistance to such persons because money owed to the State or to a local authority is exempt from any insolvency process. I ask the Minister to reflect on this issue over the break, on the assumption that these provisions will come back to the finance committee or this House.

  My second observation relates to the role of the IMF on the international stage. The Minister has claimed that it is a requirement of the troika that a property tax be introduced in this country. If one studies what the IMF has done in recent decades, it is clear why it has come in for a great deal of criticism. The IMF, in fact, has made a lot of bad decisions, including privatising education in parts of Africa. In that instance, people argued locally that it should not be done because children would be pulled out of school, to which the IMF responded that according to its economic models it was the right thing to do. In other words, it was theoretically the correct action to take. The outcome, however, was that children were indeed pulled out of school because their parents did not have the money to meet the theory. Reality and practice simply did not align. Theory is all very well for steady state economies that can afford to adhere to a model which demands that the revenue base be broadened and local services improved through such measures as a property tax. In an economic crisis situation such as we are currently experiencing, however, theory will not suffice. The problem is that the IMF has been guilty time and again, all over the world and for several decades, of enforcing theoretical solutions to crises. What is happening here seems to me a case of more of the same.

  In 2008, ironically, the IMF was running out of money as a consequence of the global boom. Its leaders came to Harvard Kennedy School at that time and offered a full mea culpa for its past mistakes and undertook to change its ways. The problem from their perspective was that suddenly there was no money to send their children to private school in Washington DC. That sounds flippant but was actually the case. The IMF was running out of money because it could not lend to anybody, which is how it pays for itself. Its representatives claimed to have learnt from the past, but we can see now that they did not.

  I do not accept that the Minister is obliged by the agreement with the troika to introduce this tax, but I absolutely accept that the IMF is supportive of it. It is, according to its own theoretical models, the correct action to take. I conclude by asking the Minister again to reflect during the break on the points raised in this debate, namely, the inability to pay issue, the stress on households and the fact that the IMF gets it wrong most of the time when it applies theory to crisis. That approach simply does not work.

Deputy Catherine Murphy: Information on Catherine Murphy Zoom on Catherine Murphy I support amendment No. 4, which is line with amendments I have tabled dealing with such issues as negative equity and stamp duty. These are issues the Fine Gael Party referred to specifically in its election manifesto - on page 27 of the document, if I recall correctly. Many people paid a great deal of attention to what the party had to say before the election and decided to elect its members to the Dáil on that basis. Those voters had an expectation that a tax on the family home would not be introduced by this Government. They paid careful attention when Fine Gael expressed concerns regarding the implications of a property tax for people who were asset rich and income poor and those who had paid sizeable sums in stamp duty in recent years. The Minister said earlier that people with larger houses tend to have larger incomes. That was not his view at the time his party manifesto was drawn up. In fact, there are many people who are asset rich and income poor and they will be impacted in precisely the way the Minister's party undertook not to permit.

One of the observations that is often made regarding Independent Members during elections is that we are not on a par with the parties because the latter put together policies and manifestos setting out clear choices for voters. The reality, however, is that we have seen the Minister for Communications, Energy and Natural Resources, Deputy Pat Rabbitte, on television in recent days telling us that such undertakings are simply what parties do before an election. The views offered by Members on this side of the House are treated by the Government as some type of comedy sketch, even though they are the same views set out in the Fine Gael manifesto before the election and to which people consequently believed that party would adhere in government. Moreover, the Fine Gael manifesto was drawn up in full knowledge of the memorandum of understanding with the troika. The party knew what was the economic situation when it put together its policies. People have an absolute right to be enraged at the difference between what was promised and what is being done by Fine Gael in government.

There was certainly an expectation that the plight of home owners in negative equity would be given a high priority by this Government, with solutions rolled out at an early stage. Many of these householders, because they are of a certain age and bought at a certain time, are the same ones whose mortgages are distressed. Instead of offering solutions for that cohort, however, the Government is lumping additional pain on it. Talking frivolously about the new tax being only €4 per week ignores the reality that some of these people are absolutely at breaking point. I do not want to keep reiterating the point regarding suicide, but I had three constituents visit me on a Friday afternoon recently who told me they were contemplating taking their own lives. What does one say to somebody who is in that horrific situation? There is a breaking point for people and large numbers in this country are getting closer to it by the day. What we see here is a situation where there are two Irelands. One of these is doing so badly that the people who make up its population are being put at real risk.

I particularly support the provision in the amendment for account to be taken in assessing the value of a property of any adaptations made to accommodate householders' disabilities. There is a great deal of irony in a situation where a household deemed eligible for a grant from a local authority - which depends, of course, on whether one lives in the right county and the local authority has a discretionary fund to enable it to draw down moneys for that purpose - to construct an extension to accommodate a family member with a disability, and whose home consequently increases in value, will be liable for a higher property tax payment, even though the adaptation made might have kept the person with the disability out of residential care. I urge the Minister to give this proposal careful consideration.

Like other speakers, I have a difficulty with the word "local" in reference to the property tax. We do not have a system of local government in this country but rather a very poor and dysfunctional system of local administration. Local decision making is essentially centralised and the notion that there will be major reform in this regard, with up to 40 councillors in a room, is nonsensical. In the absence of any steps towards meaningful local government reform, it is difficult to ask people to countenance a local property tax without making clear exceptions where there is a clear need for such. I understand, for example, that the Commission on Taxation proposed a seven-year exemption for householders who paid stamp duty in recent years. That proposal should be revisited. It is simply immoral to ask people who already essentially paid a property tax lump sum to pay it again within such a tight timeframe, especially when many such householders are burdened with 100% mortgages.

My final point relates to the role of the Revenue Commissioners in collecting the property tax. This will create a monster out of Revenue while lumping an enormous responsibility onto it. There is a breaking point in that organisation and this new role will endanger the orderly collection of other taxes. That is a matter of serious concern.

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