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Financial Resolutions 2013

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Budget Statement 2013

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Snippet Contents:

This proposal will bring in €300 million in a full year. Behind the property tax, it is the second largest revenue generating item in this budget.
Today the Government has targeted families with children, who need their car to go to work and who have made sacrifices to provide a home. A family on low to middle income, with three children, living in a modest house with a mortgage and valued at €220,000 in a full year will pay €405 in property tax, an increase of €305 on the household charge, and will lose €10 per month for the first and second child and €18 per month for the third child, a loss of €456 in a year. Assuming it is a one income household, it will lose €264 in PRSI and will pay at least another €50 in motor tax, amounting to just under €1,100. That does not count the additional money for the drugs payment scheme and the additional charges Ministers will announce later this week, such as school transport costs. We have yet to find out the impact of the Minister for Health's proposals for health insurance premiums.
That impact is irrespective of income: it is not income sensitive. The example I gave is the same for a couple on €20,000 as for a couple on €200,000. It does not matter. The property tax, the child benefit cut and the PRSI increase are not income-related. How can the Minister stand over a situation where people on low and middle incomes will lose as much in nominal terms and far more proportionately than people who earn multiples of their incomes? It is inequitable by anyone's standards.
Before last year's election, the Labour Party said it would not agree to cuts in child benefit, that it was a red line issue for the party. Families were told child benefit would be safe under Labour. It was a commendable stance to take during a general election and the party was so exercised by the issue that during the election it took out newspaper adverts and erected posters warning people about the dangers of voting for Fine Gael. In the first budget, the Labour Party broke that promise. It cannot blame Fianna Fáil, the troika or the memorandum of understanding for that because it says nothing about child benefit. Just like the pledge on student fees during the election, the pledge on child benefit was made with the full knowledge about the state of the country's finances. The party made that promise to secure votes. It got the votes, is now in power and has broken that promise twice. That is the Labour Party's record on child benefit and it will not be forgotten by families around the country.
There will be an attempt to say this budget was dictated by the troika, that the cuts and tax increases were decided in Brussels and Berlin. This budget, like last year's budget, was decided in Dublin after the four wise men let the Cabinet see it on Wednesday. I acknowledge the Minister is working within tight constraints and must introduce a budget with an adjustment of €3.5 billion and there is no easy way to do that. The decisions announced today are the decisions of this Government and as the Minister said up to 14 months ago, the troika made clear it has no difficulty substituting one fiscal measure for another with equal value.
Let us look at the record of this Government. It has cut home help services from elderly citizens while protecting bankers' pay and pensions. It has cut special needs assistants from special schools while paying its advisers above the agreed pay cap. It shamefully forced the most severely disabled people in the country to stay outside the gates of this House overnight in the cold to embarrass it into a U-turn when it proposed to cut their personal assistants. We must question the Government's priorities when we hear the parents of children in a school in Dublin must be told to make sure their children have a coat on in class because it cannot afford to fix the boiler. We must question its priorities when HSE social workers are writing to the Society of St. Vincent de Paul asking for public donations to be used to paper over the gaping cracks in the public health service, even before the health cuts that will be introduced by the Minister today. There is something perverse about continuing to pay increments to senior civil servants while the elderly, who have lived through the toughest of times and kept the State afloat, are now being asked to pay the price.
The centrepiece of the tax package is a new tax on the family home. Thousands of families and individuals will simply be unable to pay the property tax. The Government did not raise the possibility with the troika of the property tax being replaced with other taxation measures. The Minister knows that the memorandum of understanding we signed up to in 2010 provided for a site value tax, an altogether different animal to the market value family home tax he is introducing in this budget.
The Minister should have told the troika there is no question of introducing a family home tax against a backdrop of a mortgage arrears crisis that is out of control. The Minister has the perfect reason for doing it but instead he is proceeding with a punitive tax on the family home at a time when most people can ill afford to pay it. This will be a divisive tax, which will hit all home owners but especially penalises home owners in Dublin, Cork and other major urban centres.
Where is the legislation underpinning this property tax? We were promised we would have the legislation for this debate but we do not have it. Where is the Thornhill report? It has been knocking around Government Buildings since June but the Government did not have the courtesy to publish it in advance of today's budget so we could have a proper debate. This is the Government that talked about reform of the budgetary process.
This tax will be hardest felt by families in low to middle income brackets and by those dependent on welfare. We believe this is the wrong tax at the wrong time. According to the last official figures from the Central Bank, almost 170,000 mortgages are in arrears or have been restructured, more than 20% of family home mortgages. That is likely to rise to one in four when the next official figures are released. The mortgage arrears problem has got dramatically worse in the 21 months the Government has been in place. These people cannot pay their mortgages, they are not choosing not to pay, they do not have the money to pay, and now the Minister is imposing a property tax on them. How many people sitting at the Cabinet table have any understanding of what it is like for a family which is struggling to make the monthly mortgage repayment?