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Finance (Local Property Tax Repeal) Bill 2013 [Private Members]: Second Stage (Resumed) (Continued)

Wednesday, 12 June 2013

Dáil Éireann Debate
Vol. 806 No. 2

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(Speaker Continuing)

[Deputy Seamus Healy: Information on Seamus Healy Zoom on Seamus Healy] Local authority tenants will also have to pay the tax through their rent and lower and middle-income families who own their house, even if it is in huge negative equity and mortgage arrears, are compelled to pay this tax. It is a shameful item of regressive legislation, introduced with the support of the Labour Party. It is certainly not a property tax, it is a family home tax and is called a property tax to attempt to fool the population. It is a hated tax and the public are waiting for the opportunity to give the Government parties a bloody nose. They will do so in the local and European elections in 2014.

The Labour Party has played a despicable role in this and I call on members of trade unions affiliated to the Labour Party to instruct their unions immediately to stop taking the political levy from contributions. This is a method of sending a strong message to the Labour Party.

Deputy Ciarán Lynch: Information on Ciaran Lynch Zoom on Ciaran Lynch This is nothing but a populist Bill with no credibility and it reflects the type of Darby O'Gill economics we have become used to from Sinn Féin. In the last budget, the Sinn Féin budget proposals were not costed by the Department of Finance, the first time in the history of the State an Opposition party has submitted proposals that were not costed. If this was a meaningful debate, we would discuss the legitimacy of property tax. It is bizarre that so-called left-wing Members of the House are opposed to the principle of property tax. They can argue about its construction and its progressiveness-----

Deputy Joan Collins: Information on Joan Collins Zoom on Joan Collins It is a family home tax.

Deputy Ciarán Lynch: Information on Ciaran Lynch Zoom on Ciaran Lynch -----and other matters but left-wing parties opposing the principle of a property tax beggars belief. In a meeting of the Joint Committee on Finance, Public Expenditure and Reform before Christmas, every economist from the left and the right spoke about the progressive nature of property tax as opposed to income tax. Even spokespersons invited before the committee by Sinn Féin agreed with the concept of a property tax.

The Labour Party has made a mistake on property tax and it made it in 1997. Back then, a property tax was introduced on the market value of houses over £101,000, which is what we were dealing in at the time. It equates to just under €130,000 today. A further requirement was an income in excess of £30,000, which equates to just under €40,000. The average industrial wage at the time was some €17,000, so this was a benign tax. However, following massive media pressure headed by Gay Byrne, which Fintan O'Toole referred to during the presidential campaign, the Government backed away from the tax. What a pity. The type of gatekeeping that would have been in place, if the tax had held, would have caused the abatement of the bubble. At the time, mortgages were issued at a ratio of 2:1 or 3:1 with regard to household income. If people had seen house values approaching €100,000 but wages remaining static, they would realise that something was wrong and that the property sector was getting out of control. In terms of normalising and managing a housing market, which is something the Government is doing through the insolvency legislation and other ways because of the need to have a housing market, the property tax is a critical part.

Who does the tax apply to? There are 1.6 million households in the country. Some 129,000 households are living in local authority houses, according to 2011 figures. Some 25,000 are in rent free accommodation, 15,000 are living in voluntary housing co-operatives, and 300,000 people are renting in the private sector. When talking about hardship, we are referring to the mortgage sector, people whose principal residence is their home. Some 1.1 million people are in that sector and the amazing thing is that half of the people who own their homes do not have a mortgage. In fact, they have not had a mortgage for years and the percentage is now greater than it was in 2011 because new mortgages have been at an all-time low since 2011 but people who entered mortgages in 1993 are now exiting. The proposal by Sinn Féin is not to tax people who can afford to pay a property tax. Half of the homeowners in the country do not have a mortgage and Sinn Féin does not want to tax them.

There is an issue of hardship and it is regrettable that the Bill did not look at equity and progressiveness. In that case we could talk about people in real difficulty rather than the approach of wiping the slate clean and finding €250 million elsewhere. That debate did not happen this evening and that is why we have Darby O'Gill politics coming from our colleagues in Sinn Féin.

The Fianna Fáil contribution last night was very interesting. It appears the Fianna Fáil finance spokesperson does not understand the deferral system. The deferral system is based on simple interest, so that people defer the sum and it runs for ten years. We are now arriving at the point where housing inflation is beginning to return. Even at a rate of 2.5%, if someone defers for ten years, the house will be worth more in ten years time than it is now and the sum deferred will be one third of the value added based on a 2.5% rate. It makes sense for an elderly person to defer because he or she is not leaving a debt but leaving an asset that acquires value at a modest rate of 2.5% over the next ten years.

Deputy Joan Collins: Information on Joan Collins Zoom on Joan Collins It is a family home.

Deputy Ciarán Lynch: Information on Ciaran Lynch Zoom on Ciaran Lynch That shows the nonsense of the proposal because the asset is being left to someone with a value. The person is not leaving behind debt but an asset that is increasing in value over the next ten years.

The goal is to get Ireland into a position of recovery. We have commenced work on it. One of the significant areas of the Irish economy that needs recovery is the normalisation of the housing market. We do not need a return to the days of boom and bust but a structured recovery built upon a sustainable model. Property tax is part of that and it is regrettable that Sinn Féin has taken this position. It did not even have the bottle to call for a boycott of the property tax. The earlier press release by Sinn Féin did not call for a boycott of the property tax because if it entered government, it would have to deliver on that promise and would not do so. I recommend the Bill is opposed in the strongest terms.

Deputy Anthony Lawlor: Information on Anthony Lawlor Zoom on Anthony Lawlor Let us talk about the chameleon known as Sinn Féin. Let us look at what the chameleon known as Sinn Féin is calling for, a repeal of the Act enacted last year. What about the five members of the chameleon known as Sinn Féin in the North of Ireland, who are members of the House of Commons? Have they ever tabled a Bill before the House of Commons looking for repeal of the district home tax in the North of Ireland? No.

Deputy Peadar Tóibín: Information on Peadar Tóibín Zoom on Peadar Tóibín We are abstentionists.

Deputy Anthony Lawlor: Information on Anthony Lawlor Zoom on Anthony Lawlor Let us look at what the chameleon known as Sinn Féin has done here with regard to councils. What have they asked council candidates for the next election to do? Council candidates will stand on the platform of reducing the local property tax rate in this country. What did the candidates for the chameleon known as Sinn Féin do in the 2011 election in the North? Did they mention they would reduce the district home tax in Northern Ireland, where they have control?

I would like to live in Castlereagh. It has the lowest district home tax in Northern Ireland because not one Sinn Féin member sits on the district council of Castlereagh. Where Sinn Féin has dominated, in places such as Newry, there has been a 50% increase in the value of the district home tax over the rate in Castlereagh.

Deputy Peadar Tóibín: Information on Peadar Tóibín Zoom on Peadar Tóibín Why does Deputy Anthony Lawlor not stand for election in Castlereagh? He would not get one vote.

Deputy Anthony Lawlor: Information on Anthony Lawlor Zoom on Anthony Lawlor The chameleon known as Sinn Féin operates on two levels. It does not tell the truth about what is going on down here.

Deputy Dara Murphy: Information on Dara Murphy Zoom on Dara Murphy Any well-run economy requires taxes to pay for its expenditure.

Deputy Peadar Tóibín: Information on Peadar Tóibín Zoom on Peadar Tóibín And emigration.

Deputy Dara Murphy: Information on Dara Murphy Zoom on Dara Murphy We have three of the main four types, including a tax on spending, VAT and excise; taxes on transactions, which have been severely hit because stamp duty receipts are a quarter of what they were in the boom; and a tax on work, namely, income tax. The Government has joined the well-run economies by broadening the tax base for the future and introducing a property tax targeted at providing community services.


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